#869: Max Levchin, PayPal and Affirm — The Path from The Soviet Union to Building Multi-Billion Dollar Companies (Plus: Real-World Socialism vs. Capitalism)
Max Levchin (@mlevchin) is a serial entrepreneur and investor in 100+ startups. He's the founder and CEO of Affirm, the payment network powering consumer purchases and merchant growth. An original PayPal co-founder, Max served as CTO until its 2002 acquisition by eBay.
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Timestamps:
[00:00:00] Start.
[00:02:50] The Ronin line that rewired how Max makes every decision.
[00:06:09] Paprika-style brain-computer interfaces.
[00:09:09] PayPal's founders lived inside a Neal Stephenson novel.
[00:19:21] Transformation via Neuromancer and Snow Crash.
[00:23:40] The book that found Max his wife.
[00:29:24] The real secret to a great marriage.
[00:38:29] What's worth tracking, and what's not.
[00:44:13] A scrawny kid, a clarinet, and a Kyiv velodrome.
[00:46:55] What going all-out on a bike actually gives you.
[00:51:02] The mantra by which Max rides.
[00:53:02] A Soviet kid's fear of socialism.
[01:02:48] Making a profit without destroying society.
[01:04:31] What is Affirm, and why did every banker say it would fail?
[01:20:18] Why the best mathematicians eschew the lending industry.
[01:23:50] Does agentic commerce break Affirm, or supercharge it?
[01:28:01] A PhD-level financial advisor in everyone's pocket.
[01:29:58] How close are we to buying anything through one AI chat?
[01:36:32] Improving your coffee: cheap, intermediate, and Bugatti options.
[01:44:33] The books every first-time founder should actually read.
[01:48:08] Claude Shannon, Ed Thorp, and the joy of playful genius.
[01:51:00] Why physical books still beat every digital reading experience.
[01:51:44] Parting thoughts.
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Affirm's Max Levchin Breaks Down How Buy Now, Pay Later Really Works
Max Levchin probably knows as much about online payments as anyone. He was part of the original "PayPal mafia" before going on to become co-founder and CEO of Affirm, the $22 billion player in the Buy Now, Pay Later industry that's hoping to disrupt the incumbent credit card companies. While BNPL is booming, there is still a lot of confusion about how it works, how it makes money, and how transparent its activities are. On this episode, we speak with Max about why he started his company, and why he believes that BNPL offers a superior product to traditional forms of payment and credit. We also discuss the current state of the economy, AI, and what he sees as the role of crypto in payments.
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PayPal: Max Levchin (June 2022)
During its formative years in the late 1990's, Paypal attracted an extraordinary group of young entrepreneurs, who then went on to build some of the best known companies in tech. They became known as The PayPal Mafia—and Max Levchin was one of the leaders. A computer genius from Soviet Ukraine, Max joined Peter Thiel, Elon Musk, Reid Hoffman and others as they grew PayPal into a massively successful online payment service. Along the way, they encountered almost every start-up challenge imaginable, including the emotional ouster of Elon Musk as CEO. After PayPal was acquired by eBay in 2002, Max couldn't sit still, so he launched a startup lab that eventually led to another successful fintech company: Affirm.
This episode was produced by Alex Cheng with music by Ramtin Arablouei. Edited by Neva Grant, with research from Claire Murashima.
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20VC: Affirm Max Levchin on Why Grading Talent by Letter (A or B) is Total BS | How to Create a Culture of Post Mortems and Writing | Why You Should Only Study Failure Not Success & The Biggest Surprises Scaling to $18.7BN Market Cap
Max Levchin is one of the great founders and technologists of our time. As the Founder and CEO of Affirm, he has built am $18.7BN monster in the buy no pay later space. Prior to Affirm he was one of the original co-founders of PayPal. Max is also the co-founder and Chairman of Glow, a data-driven fertility company. Max is also an immensely successful angel investor with a portfolio including the likes of Yelp, Pinterest and Evernote.
In Today's Episode We Discuss:
04:19 How to Hire the Best People in the World
05:05 How to Manage Extreme Personalities
08:18 Biggest Lessons on Trust and What Happens When Lost
12:05 Is Grading Talent A and B Players Total BS?
15:31 How to Think About Calculated vs Uncalculated Risk
27:18 How to Create a Culture of Post Mortems: Step by Step
32:08 Why Every Person Must Write and How to Create a Writing Culture
36:01 Leadership Lessons from Layoffs
38:38 Is Affirm Losing or Beating Klarna in the US?
47:03 Peter Thiel or Elon Musk: Who Would Max Rather Start a New Company With?
48:37 Quickfire Round
Affirm: Max Levchin (Part 2 of 2)
After PayPal sold to eBay in 2002, Max Levchin could have relaxed on a beach for the rest of his life. But that’s not the kind of person he is. He isn’t happy unless he’s coming up with new ideas and building companies – so much so that he actually fell into a dark place after leaving PayPal. He didn’t fully find himself until years later, when he rediscovered his passion for the “hard, valuable, fun” problems of fintech. Now, Max runs another billion-dollar company: Affirm, a “buy now, pay later” service that’s transforming how we purchase things on credit. This is the second part of a two-part conversation with Max; to hear the story of PayPal, be sure to listen to part 1!
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PayPal: Max Levchin (Part 1 of 2)
During its formative years in the late 1990's, Paypal attracted an extraordinary group of young entrepreneurs, who then went on to build some of the best known companies in tech. They became known as The PayPal Mafia—and Max Levchin was one of the leaders. A computer genius from Soviet Ukraine, Max joined Peter Thiel, Elon Musk, Reid Hoffman and others as they grew PayPal into a massively successful online payment service. Along the way, they encountered almost every start-up challenge imaginable, including the emotional ouster of Elon Musk as CEO. After PayPal was acquired by eBay in 2002, Max couldn't sit still, so he launched a startup lab that eventually led to another successful fintech company: Affirm. Guy will talk to Max about Affirm next week, in the second episode of this two-part series.
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20VC: Max Levchin on What Makes A Truly Great CEO, Why Self-Awareness Is The Most Important Trait For Entrepreneurs & Why When There Is Doubt There Is No Doubt
Max Levchin is the Founder & CEO @ Affirm, the company that aims to remake consumer finance from the ground up. They have backing from some of the best in the business with over $400m in VC funding from the likes of Founders Fund, Lightspeed, Andreesen Horowitz, Khosla Ventures and Spark Capital just to name a few. Prior to Affirm, Max held numerous exec positions including Chairman of Yelp for 11 years and sitting on the board of directors @ Yahoo. Before that, Max founded Slide, subsequently bought by Google and was the Co-Founder & CTO @ Paypal.
In Today's Episode You Will Learn:
1.) How did Max come to co-found Paypal and how did that serve as the foundations for his founding of Affirm today?
2.) Why does Max believe there is a crucial misalignment between service providers and consumers in financial services? Does Max agree with Bill Clerico that 'we are still in the very early days for Fintech?'
3.) Having co-founded Paypal, Slide and now Affirm, how has Max changed as a leader and CEO? What does Max believe makes the truly great CEOs? Are there commonalities in how they operate and their skills?
4.) What does Max look for in all new hires or when evaluating founders for potential investment? Why is self-awareness so important for entrepreneurs to have? Why does Max want to be slightly terrified by how smart an individual is?
5.) How has having Children changed Max's perception of what is important and what he chooses to spend his time on? How does that reflect in his actions and self-discipline?
Items Mentioned In Today's Show:
Max's Fave Book: The Master and Margarita by Mikhail Bulgakov
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a16z Podcast: Building Affirm, and Why Max Levchin Has Watched Seven Samurai 100-Plus Times
Max Levchin helped build PayPal. Then he went onto tackle gaming at Slide. Now he’s back in the world of payments and finance with his latest startup Affirm. a16z’s Angela Strange talks with Levchin about Affirm’s opportunity in the world of finance, and how it aims to build trust among a customer base that doesn’t trust banks. Why building models around loans requires making bad loans, and finally, why everyone should start watching Kurosawa’s "Seven Samurai" -- over and over.
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Recode Decode: Max Levchin, Affirm CEO
Affirm CEO and PayPal co-founder Max Levchin talks with Kara Swisher about being a serial entrepreneur and discovering more about himself in the process. He also discusses why startup founders and investors are increasingly flocking to finance, the problems with banking that tech can solve and what Marissa Mayer is doing right at Yahoo.
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