Max Levchin’s Battle Against Credit Cards

Photo: Karen Santos

Not Max Levchin anti-credit really wants you to know. He is anti-credit card. There is a big difference.

He’ll be talking nonstop about credit cards, and each time he will expertly bring them all back to his company, Affirm. He will preach that AI-informed loans are far better than credit cards. It is perhaps not surprising that Levchin believes some form of technology will be the solution. He’s a piece of Silicon Valley lore, a technologist whose career began in the bubbling age of techno-optimism and skyrocketed, landing directly into this new age where the future feels a little more ominous.

At one end of her story: a Soviet Ukrainian immigrant whose family came to the United States in 1991 for just over $600. On the other hand: 2021 Forbes billionaire. A pivotal moment in his career came when Levchin was in his early 20s, when he persuaded investor Peter Thiel to finance his then-bare-bones company. It was PayPal. (Yes, Elon was there too.) After eBay snatched up the payments company, Levchin created a suite of photo-sharing tools called Slide. Google bought it. Then came the ovulation tracking app and fertility services company Glow, which Levchin likes to point out, helping couples conceive nearly 2 million babies as if the app itself had delivered them.

But Levchin has kept one foot in fintech even as it launches Glow. In 2012 he founded Affirm, which launched a new type of consumer loan. Sure, PayPal has taken on the responsibility of persuading the masses to buy something online, but many people still pay for online purchases with old-fashioned credit cards, a pre-internet product. There are 191 million Americans with credit card accounts. Today, these people collectively owe $925 billion; this figure made the 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, short-term installment plan or credit to purchase directly at the vault.

Buy now, pay later (BNPL) is named after this model. People are bombarded with options to fund online purchases through Affirm and competitors like Klarna, AfterPay and PayPal, which are launching their own BNPL product in 2020. partnering with lenders to promote sales. They also charge interest or late fees from customers who miss their payments or interest on longer-term loans.

Most of us have to borrow money at some point in our lives, and a society built on BNPL is better than one piled on credit cards—even if it’s used to finance basic needs like food and fuel, according to Levchin. And BNPL services are built to be attractive and easy to use, so much so that the U.S. Consumer Financial Protection Bureau is exploring the potential for consumers to dig so deep. Saying that Affirm’s machine learning algorithms will prevent over-risk loans, Levchin believes that, unsurprisingly, the technology can save the day.

While some billionaires are eager to fix the world or take us into new worlds, 47-year-old Levchin is now the kind of serial entrepreneur who has become obsessed with what he’s building. He met me at Affirm’s office in downtown San Francisco last month, wearing his usual rimless glasses and a short-sleeved Affirm polo shirt. He often steered the conversation to the downsides of his sworn enemy (credit cards), but also talked about the tides of the broader economy and how these became increasingly intertwined with Silicon Valley’s technologies and ideologies. Levchin thinks it stems from tech enrichment techniques, but doesn’t really make life better for everyone else. Oh, and he finally shared some thoughts on Elon Musk’s Twitter. Speech edited for clarity and length.

Lauren Goode: The last time we chatted on tape was Max, when you started Glow.

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