Affirm: Max Levchin (Part 2 of 2)

**Max Levchin** (0:02)
As we were brainstorming ideas, the first filter I would apply is what is sort of gut-wrenchingly difficult that just people are willing to go to the ends of earth to figure out? And I said, credit scoring is such a gnarly problem. I still brace for impact every time I hand my credit card over, because who knows, they might cut it up and bring it to me in two pieces because my credit is so bad. And it was sort of this like, oh, that's really hard. There's a lot of people like me who screwed up in college and probably would like to buy things using credit, but have these horrendous triple digit rates they have to deal with. So that was the jump off point. Then we went to work feverishly.

**Guy Raz** (0:50)
Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on the show today, how Max Levchin regained his sense of purpose after losing himself in the long shadow of PayPal and eventually built a firm, another multi-billion dollar fintech company that's changing how we buy things on credit.
I love every conversation I have with founders for this show. I learn so many things from each interview, and as a team, we spend a lot of time trying to find founders who've built brands that have had some kind of wider cultural impact. But most importantly, we look for founders who are willing to be open, because really what I'm asking each founder is to share his or her story in the hope that you, you the person listening, will benefit from it. And in some ways, Max Levchin could be the poster child for this mission, in part because Max is obsessed with solving hard problems. So much so, he named his tech incubator HVF, which stands for Hard, Valuable and Fun. Not only was he a key founder and developer at PayPal, but he went on to have a hand in the founding of Yelp, Glow, which is a suite of apps around fertility and pregnancy, and now Affirm. It's a platform that allows you to buy millions of products by splitting up the payments into equal installments. This is one of those rare How I Built This episodes where the interview went on for such a long time, and the interviewee was filled with so many great stories and insights that we broke it up into two episodes. And if you missed last week's episode, please go back and start there before continuing with this one. Last week, we heard about the origin story of Paypal and all the characters who helped build it, including Reid Hoffman, Peter Thiel and Elon Musk. Paypal eventually sold to eBay for $1.5 billion. But after walking away with a significant chunk of money, Max was bored. He wasn't gonna sit on a beach for the rest of his life. He needed a new hard problem to solve. And so he started to explore. He first went down the social media rabbit hole with a product he built called Slide. Before he landed on a new idea. An idea to make it easier for people to buy products on credit, without punishing interest rates and late fees. Over the past 10 years, a firm has grown to become one of the country's most highly rated brands in what's known as the buy now, pay later sector. But for now, let's pick up the story where we left off last week. It's around 2002-2003, and Max has walked away from PayPal with a reported $34 million. But he's having what he describes as the worst year of his life. He feels rudderless, he's just sitting around his apartment and his pajamas, and waiting for something to happen. And to make matters worse, his then girlfriend Nellie has just broken up with him.

**Max Levchin** (4:13)
Yep, she basically said you're insufferable, go figure out what you want to be. I'm pretty sure we're going to get back together, but you're impossible to be with. Go away and be on your own for a while.

**Guy Raz** (4:26)
Did you ever want to kind of be a 27-year-old with some money and get an awesome car and get a great place to live and just kind of blow some cash? Did you ever do any of that?

**Max Levchin** (4:41)
I attempted a poor excuse for that right after she broke up with me. I always wanted to live in a loft somehow. I was obsessed with this idea of extremely high ceilings. I got this loft south of market in San Francisco, and I decided to learn how to DJ. I think I was trying to call myself DJ Irate. I'll leave it to the reader to understand what that meant. But I took a bunch of lessons, got some equipment, and then started inviting my nerdy PayPal friends to come to my loft and have dance parties.