How to build a successful tech startup according to Paypal founder Max Levchin

The work of an influencer never stops. Max Levchin hit it rich at age 27, then he went right back to the office. In 1999, Levchin co-founded PayPal, which was sold to eBay three years later for $1.5 billion. Levchin gained a $100 million fortune from the deal.

Soon after, he launched Slide, a social networking business that he sold to Google for hundreds of millions. He now runs yet another company– the digital loan business, Affirm– and other endeavors as well. Levchin is here to talk about how to find and build successful tech startups over and over again.

Hello, everyone. Welcome to “Influencers.” I’m Andy Serwer. And welcome to our guest, Max Levchin, CEO of Affirm, co-founder of PayPal– part of the PayPal Mafia, and a million other endeavors– maybe just a polymath. We can call you that. We’ll get into all the things you’ve done.

MAX LEVCHIN: I like that. I like that.

ANDY SERWER: Anyway, welcome. Good to see you.

MAX LEVCHIN: Good to see you.

ANDY SERWER: So, Max, how would you describe what you do to, say, an 8-year-old nephew? What do you do for a living? What’s your work?

MAX LEVCHIN: So I normally tell people I start and run companies– that’s kind of a one– one-liner introduction. But, when pressed, I revert back to, I just write code. That’s kind of how I think of myself.


MAX LEVCHIN: A coder, a hacker, a builder, a company starter. That’s– I haven’t thought of this one–


MAX LEVCHIN: –too carefully.

ANDY SERWER: All right. Well, maybe we can loop back to it. Why don’t you tell me about Affirm, your latest company right now.

MAX LEVCHIN: It’s been latest company for over seven years, so it’s a bit of a– bit of a long-in-the-tooth startup, but still very much a startup. The– it’s a bit of a throwback to my PayPal days. So PayPal was all about innovating above the credit card rails, where we took credit cards– which, 20 years ago, were really hard to use online– and built the user interface– which turned out to be much more than a user interface– to make it easy to use in a browser. And online commerce was never the same.

20 years later, it took me a long time to realize that, the underlying infrastructure– the– what’s below the rails, below the ground– isn’t especially well-made. It’s not transparent. It’s not especially consumer-friendly. It has its own user interface problems– makes money on people’s mistakes, kind of, at a very fundamental level.

And so I wanted to go back in there and see if it can be remade better. So seven and a little bit years ago, we started a company with initially just a very narrow view of, let’s do a better job scoring credit. So– so the venerable credit score that everybody uses today is pretty opaque. It’s not really clear.

There’s plenty of information online, where this fraction is how much credit you have used, and this fraction is how much money you made. But there’s not a whole lot more to it that’s been well understood. And, as a result– and, from personal experience, I came to the US as a teenager, had to have my PayPal co-founder sign for my first car loan, my first cell phone.

You know, this is after PayPal IPO, so your credit history is– is not exactly well-utilized as your credit is being assessed. And so Affirm, initially, was this idea, let’s build a better score– let’s build something that’s transparent, that’s inclusive, that brings people in where they’re being excluded.

And then it expanded from there, where, at this point, we are embedded at the point of sale as a lender of records. So when someone wants to buy a thing, we will underwrite you– tell you, hey, here’s how much credit we can offer you. We’ll actually pay the merchants, and we’ll take the risk on you and finance your purchase. And then we’ll bill you over time.

The cool thing about Affirm, sort of through this commitment to transparency, we price everything in dollars, as well as rates. So you know exactly how much you will pay all in. So your principal, your interest, we stop at that number. So once you’ve paid us the amount we promise that you will, you cannot pay us more, which means we don’t compound interest into the principal, but, more importantly, we don’t charge fees of any kind, including no late fees.

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