As one of the most successful founders in tech, Max Levchin truly needs no introduction. From his early days as a cofounder at PayPal and then at Slide, Max established a reputation as both an innovative thinker and a no-nonsense business leader.
For the last nine years he’s been running Affirm, helping consumers finance purchases at the point of sale, without hidden fees or unpleasant surprises.
Yet despite his decades of experience, Max is still wrestling with new problems and overcoming fresh challenges. I caught up with him at our Leading Lights 2021 event last month. Here are some excerpts from our conversation.
You’ve had extensive experience with startups in the payments space. What did you learn from launching Affirm?
Probably the most foreign discipline for me at the beginning was sales. I’d not spent much time near a large sales machine. It took me many false starts to understand how sales really works. Turns out to be pretty simple: You need to be authentic and tell people why what you’re selling is exciting and more importantly, how it will help them.
Another thing I’ve had to learn, which was quite painful, is that some of the people who are amazing in the first two or three years of a company may end up being absolutely not the right people for years five, six, and seven. A lot of founders will think ‘Wait, this is my co-founder or close friend, someone I really trust.’ But some people scale, and some people don’t. .
One theme you’ll hear from founders is the importance of the team. It doesn’t matter if you don’t know how you’ll make money or if the product isn’t quite right yet. If the team is good, it will work out fine. And if the team isn’t right, it doesn’t matter how good your idea is, you will fritter it all away. Fundamentally, successful companies are about having the right people at the right time.
What’s different about running an established company versus a startup?
Every company is different, but the feeling you have in the early days — the excitement, the butterflies in the stomach — it’s always the same. That’s one of the things I miss after running the same company for 10 years. Those moments where you’re like, ‘Wow, I just convinced someone I never thought would join my insane quest to come be a part of it.’ That’s why I like to hang out with other founders. I get to live those early days again vicariously by listening to their problems and sharing how I handled them.
How important are a company’s values to its success?
Very early on at Affirm I fixated on drafting a clear mission statement, and being crisp about our core values. Why are we doing what we’re doing? How are we going to do it? What are we never going to do? Who’s the enemy? What sort of war are we signing up for?
At PayPal we never talked about culture. It just sort of worked. At Slide, on the other hand, we had massive culture problems. I made mistakes; bringing on folks who would have been great at some other company but didn’t quite fit the mosaic we were trying to create.
So at Affirm I was very focused on following the “No Asshole” rule. We really double click on people to make sure we don’t hire people we wouldn’t want to be friends with. And then the obsessive repetition of here’s the culture, here’s the mission, here’s why you’re here. I think over-investing in the mission and values pays excellent dividends.
Can you describe a difficult decision you made that was informed by your core values?
Our mission is to create honest financial products, which means we don’t do terrible things to customers, like charge deferred interest. Deferred interest loans are initially interest free, but if you’re late with a payment you’re charged interest compounded from the original loan date. That can drastically change the payback amount.
Early on, I was talking to a banker who told me that Affirm would never make money without charging deferred interest. He said, ‘You’ve started a charity, are you prepared for that?’ At that point we had a $100 million valuation and I’d hired 35 of my closest friends. I was like, ‘Oh shit. Did I just bury my company and my reputation?’ So I redid all my calculations and decided we had to stick to the mission. That meant saying goodbye to one of my top executives who disagreed with that decision. Billions of dollars of volume later, Affirm has never charged late fees or deferred interest. The decision was mission or bust, and I’m glad we stuck with the mission. But it could have been bust.
Being a CEO and founder can be lonely. Who are the thought partners you turn to when you’re wrestling with a difficult decision?
I’m one of those super lucky people who happens to be married to a woman who’s both the love of my life and my true intellectual peer. Nellie has been an equal partner in everything I’ve done. Not a single strategic decision happens without my having a multi-hour conversation with her. I’m also lucky to be surrounded by long-time investors like Jeremy Liew and Keith Rabois that I can call in the middle of the night and say ‘Here’s what happened, what do you think?’ It’s not quite as intimate as talking to the wee hours while wearing pajamas, but it’s close.
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