Photo: Karen Santos
Not Max Levchin anti-credit, he really wants you to know. He is against credit Map. There is a big difference.
He will talk about credit cards endlessly and he will expertly bring it all back, every time, to his company Affirm. His AI-enabled loans, he will preach, are much better than credit cards. Perhaps unsurprisingly, Levchin would believe in some form of technology as the solution. He’s part of Silicon Valley lore, a technologist whose career started in the frothy era of overflowing techno-optimism and progressed quickly, landing right in this new era – where the future feels a little more, you know, inauspicious.
On one side of his story: an immigrant from Soviet Ukraine whose family came to the US in 1991 with just over $600. On the other side: a 2021 Forbes billionaire. A pivotal moment in his career came in his early twenties, when Levchin convinced investor Peter Thiel to finance his then barely existing company. It became Paypal. (Yes, Elon was there too.) After eBay acquired the payments company, Levchin built a cluster of photo-sharing widgets called slide. Google bought it. Next came the ovulation tracking app and the fertility services company Glow, which, as Levchin likes to point out, has helped couples conceive nearly 2 million babies, as if the app itself spawned them.
But even during Glow’s launch, Levchin kept his feet on the fintech. In 2012, he founded Affirm, which ushered in a new kind of consumer credit. Sure, PayPal led the charge by persuading the masses to buy things online, but so many people still pay for online purchases with a pre-Internet commodity — old-fashioned credit cards. There are 191 million Americans with credit card accounts. Today, those people collectively owe $925 billion, a figure that made its biggest jump in 20 years in the third quarter of this year. Affirm offers a different model: an online shopper is offered a zero percent installment plan or loan for their purchase at the virtual checkout.
Buy now, pay later (BNPL), as that model is called, is having a moment. People are bombarded with options to finance online purchases through Affirm and competitors such as Klarna, AfterPay and PayPal, who launched their own BNPL product in 2020. The way these new finance companies make money: They get processing fees paid by sellers, who work with the lenders to drive sales. They also collect interest or delinquent fees from customers who default on payments, or interest on longer-term loans.
Most of us have to borrow at some point in our lives, and according to Levchin, a society built on BNPL — even when used to fund basic necessities like food and fuel — is better than one stacked on credit cards. And BNPL services are built to be attractive and easy to use, so much so that the US Consumer Financial Protection Bureau explores the potential for consumers to go too deep. Unsurprisingly, Levchin believes technology can save the day, saying Affirm’s machine learning algorithms will prevent overly risky lending.
While some billionaires are eager to put the world in order or launch us into new worlds, 47-year-old Levchin is the kind of serial entrepreneur who becomes obsessed with the thing he’s building right now. Last month, he met me at Affirm’s downtown San Francisco office wearing his usual rimless glasses and a short-sleeved Affirm polo shirt. He often steered the conversation towards the cons of his sworn enemy (credit cards), but also talked about the ebbs and flows of the broader economy, and how they are increasingly intertwined with Silicon Valley technologies and ideologies. The techlash, Levchin believes, arose from technology that enriched techies, but didn’t really make life better for everyone else. Oh, and he ended up sharing some thoughts on Twitter from Elon Musk. The conversation has been edited for clarity and length.
Lauren Goode: The last time we talked on the record, Max, was when you launched Glow.