In Conversation with Max Levchin

You had several close calls early in life, including chronic lung problems as a child and then the Chernobyl disaster, which uprooted your family from Kyiv. Do those experiences still shape how you think?

I don't think about them much as an adult. They're just things that happen. If you dwell too much, you get caught up in what might have been. I don't find it productive.

Chernobyl is interesting mostly because of the change it caused for my family. We moved to Crimea, where my father was from, and I went from a tracked school, a sort of "smart kid," very coddled experience, to a much rougher, more rural community. Not quite on a farm, but close. I had to figure out how to get along with people I never would have been exposed to before. Not everyone cared about math and science. Not everyone was planning their way into top universities. People were just trying to survive in their own way.

It was a good learning experience. When you find yourself surrounded by people who are nothing like you, you either fit in or you get rejected. Years later, when we moved to the United States, I was already prepared for that.

I have heard stories that, as a child, you got yourself into a lot of trouble, setting things on fire and running experiments that could have gone badly. Was the reckless, energetic Max the kid version of you?

It was a strange combination of reckless and very careful. I have a tendency to misjudge risk. About eighty percent of the time, I would be right. I would look at something and think this is low risk, let's do it.

The other twenty percent produced some very bad ideas. At one point I read that you could cause live ammunition to fire just by heating it. That sounded interesting, so I tried it. That was one of the dumber things I did. I also learned that old celluloid film combusts very quickly if you set it on fire. That immediately suggested building a rocket. I made one out of old camera film, and it actually worked.

Then I thought, why stop with rockets. These things explode. Let us make a bomb. Nobody got hurt, but there was a real chance of leaving the scene with fingers missing.

Reckless and careful. Can you draw a line from that kid to today? You keep starting companies, but you are also running a lender, which is a risk organization at its core. You are obsessive about fraud. Is that the same instinct?

I think it is more fundamental than that. Entrepreneurship is the constant balancing of doing things that most people would not do, while trying to reduce the number of dimensions on which you are taking risk.

In theory, you could go to Vegas and put everything on black until you run out of money. The odds are very high that you will not be successful. That is one way to try to make an interesting financial leap. A better way is to start companies. Ideally, you do not want to start companies where everything is at huge risk. You want to find a few dimensions where you take big swings or place big bets, and then make the rest as risk free as possible.

You clearly seem very motivated. Even the reckless experiments sound motivated. What was driving that? Near death experiences? Proving something to your parents?

I think I was just extremely curious. I grew up in a family that encouraged learning through experiences and experiments. I never got into trouble for trying to make rockets.

At one point I found a stash of welding equipment, which may not have been acquired in the most legitimate way, and I wanted to understand how welding worked. Some high temperature welding methods rely on carbide reactions that become extremely hot. I thought it was incredible. I wanted to see if I could control that reaction and maybe use it for propulsion.

This was a very bad idea for a seven or nine year old. It was toxic, extremely hot, and unsafe. When I explained to my parents what I was trying to do, they did not think I was trying to cause trouble. They told me it was high risk and that I should not do it that way. They said that if I was going to experiment, I needed protective equipment.

My father, who had a background in chemistry, would redirect me. He explained that if I wanted to build a rocket, there was a much safer way to do it, and he showed me how.

They leaned into it.

They tolerated it and redirected it. My father's approach was often to say, here is another way to set things on fire, but this one is safer.

At another point, I tried to build a crossbow, mostly in secret. Crossbows are powerful and highly lethal, and it was obvious I was going to hurt myself. When my dad realized what I was doing, he told me that crossbows were dangerous, but shooting a bow and arrow was fun. He suggested that we build a composite bow instead.

That turned into a serious project. I learned to shoot behind our apartment complex, which was still questionable from a safety standpoint, but far safer than building my own crossbow.

A lot of my energy was rerouted that way. The attitude was simple. I was going to do something anyway, so it was better to put it on a safer path.

They seem like good receivers of that energy and good channelers of it. You were exposed to computers through your mom, and you used the word curious, but obsessed feels closer. Now that you are a parent, can you plant that in your kids, or is it something you either have or you do not?

I do not know that it is possible to manufacture. I think curiosity is innate. I think you can amplify it. I do not know if you can take someone who is profoundly non curious about a particular topic and tell them that they should go do that.

I have a lot of friends who are computer scientists and who would love nothing more than to teach their kids, who are now fifteen or sixteen or in college, to love computer science. And many of them end up saying there is nothing they can do or say. Their kid just wants to major in film, and they ask what they did wrong. The answer is usually nothing.

We are all wired slightly differently. Genes play a big role, and there are also things that are unique to each individual that do not have a clear explanation.

One of my kids is really into programming. He did his middle school graduation project on AI, which was pretty advanced for his age. The other one was not. I would love for both of them to be into the same things I was into, but that is not how it works.

With one of them, I kept putting things in front of him and saying here is another thing you can do with a computer that is amazing. Somewhere between video games, he realized that it was actually more fun to make computers do things than just to play games on them. The other one was very clear. She just loved video games.

Both of them have done online programming courses. You can push a little. You can prod. You can offer. You can allow exploration. Ultimately, I think the higher level idea is that you amplify curiosity in whichever direction it shows up.

One of the more interesting surprises for me was my other kid, who I never expected to get into this kind of thing. She turned out to be really interested in cosmology. For a thirteen year old, that is early to be excited about very large spaces and gravitational forces. She is genuinely interested in it, and I am excited to see what happens when she takes more physics.

One way I try to think about it is exposure. My kids are much younger, my oldest is four, but if I can put them in front of a hundred things and one of them clicks, that feels like success compared to ten things and nothing clicking.

I do not think you can program your children, unfortunately.

We have talked a lot about childhood. Shifting to early career, I was surprised by how many college startups there were before PayPal. SponsorNet, NetMeridian, and then FieldLink, which later became PayPal and originally had nothing to do with payments. Were those earlier companies, whether you call them failures or not, necessary steps toward PayPal? Or would you have done things differently?

Each one served its purpose. The first was SponsorNet, and that was the one that really took me off the academic track. I do not think I had an explicit plan to get a PhD and teach, but in my family it was understood that getting a PhD was the goal. Many of them had PhDs of their own.

Academia was seen as the right path. I was actively trying to figure out how to get into MIT for a master's and PhD program. I was very firmly planted in that future. Then two people recruited me to start a company with them. It was a pretty amorphous idea.

I had done some contract programming back in the Soviet Union. For a socialist country in the late eighties and early nineties, contract programming was extreme entrepreneurship on a relative basis. It was basically nonexistent. My expectation was that I would do some work, get paid something small, and move on. In Kyiv, contract programming might get you a hundred rubles. So I assumed maybe I would get a hundred dollars at the end of this.

Instead, they said I would get twenty five percent of the company. I had no idea what that meant. That first company failed, but it gave me a crash course in starting companies. Equity distribution, team structure, and how not to do things. We did almost everything wrong.

Any investors in that one, or was it just you?

It was basically us and our credit cards. But that was the moment when I went from thinking that entrepreneurs were other people who did strange things to realizing that I was definitely one of those people.

The real crucible moment came when we were driving back from Chicago with my three co-founders. We had almost completely run out of personal capital and were about to wind the company down. Through a moment of extreme luck, we were introduced to someone who was willing to consider investing.

The company was one of the earliest advertising startups on the web, around 1995 or 1996. We pitched him in Chicago. He listened carefully and really wanted to believe, but in the end he said, "You are a bunch of college students. I have no idea what you are talking about."

He was an advertising executive at Leo Burnett. He told us that he saw a lot of value, but that there was no world in which he could give us a penny of capital because we were too far removed from how the industry actually worked. He told us to finish our college degrees.

We drove back to Champaign Urbana in complete silence. It was understood without saying it that the company was over. We were going to wind it down, pay the last office bill, and move on. It felt very morbid. But all I could think about was what company I was going to start next.

I remember being very clear in that moment that I was going to start another company. I just needed an idea. That was the point where I went from thinking I might work at a large company to knowing I would never work for another company.

The next two companies did not have to fail, but they were not likely to succeed. One involved a bitter founder split, which taught me a lot about that dynamic. Another one almost worked. I found a co-founder I got along with well, and we figured out how to distribute work thoughtfully. It was not a huge success, but it was not a failure either. It did not move my financial situation much, but it kept me from going further into debt.

That was the first time I realized there was a way to do well enough. It also gave my family some relief. None of them were business people, and for a long time they had no idea what I was doing.

The last company paid for my move from Champaign to Palo Alto. If I had failed again before moving, there probably would have been an intervention. Someone would have told me to get a job at Microsoft and earn some money. Because that last one looked like something short of a failure, the reaction was more like, all right, you do you.

It sounds similar to how your family treated the experiments when you were a kid. They tolerated it.

They were never unsupportive. They were definitely baffled.

I remember telling my mom I was going to move to Palo Alto. She said that was great, because that was where industry was. I told her I was going to be my own industry. Her reaction was basically good luck, and a sense that she was not sure this was the right thing.

It was the same tone when I later called her to say that PayPal had gone public. Her response was that I could now move back to Chicago and get a PhD. I think they were blissfully unaware of the ups and somewhat indifferent to the downs.

Would you have done Slide again?

I would have spent less time figuring out that it was not for me. The mistake with Slide was the belief that I should not do another financial services company because how do you possibly top PayPal. It is the classic sophomore album problem. If you have a hit record, your second one cannot be too similar because what if you do not outsell the first.

I spent a lot of time building frameworks for how to create something cool, special, unique, and important that was not like PayPal. I decided the web was becoming more about humans than about computers. I wrote a small manifesto about how the web would be organized around the seven deadly sins, and that there should be a startup for each one. There would be a food delivery startup because we want to eat right now.

I chose vanity. That was my favorite sin.

In reality, I had no business in that industry. Vanity lives in fashion and media, and I am not of that world at all. The idea that I should avoid financial services and instead pursue something that fit my big framework was wrong. The reasoning was sound, but the conclusion was wrong. If I believed I could see where things were going, I should have focused on the thing I already knew how to do.

Doubling down on your strengths is good advice for everyone. It took me longer than it should have to realize that there are many people who are genuinely great at media, and the fact that this happened to be the moment for social media should not have swayed me. I am very stubborn.

I cannot imagine you working at Google for some reason.

It did not exactly work. I spent a lot of time trying to learn, which was productive, and a lot of time complaining to Sundar, who was amazing. I consider him a friend now, but at the time he was a VP of Engineering working on Chrome.

I joined a company with thirty six thousand people, and it felt like an endless sea of people I would never meet again. Sundar quickly realized that I was lonely and trying very hard to make an impact because that is what I thought I was there to do. He took me under his wing and was a great source of support. He helped me see that there might be something meaningful for me to do there.

Ultimately, leaving Google came down to scale of impact. It is very hard to move the needle at a company making thirty billion dollars a year, even if you are the CEO, and certainly if you are a VP of Engineering. Sundar was one of the few people who made a real effort to make sure I did not feel completely alone.

Fast forward to Affirm. Give it another ten or twenty years and it could be that kind of firm. What is Affirm's scale right now?

We will do about thirty five billion dollars in GMV, a couple billion in revenue, and we have around two thousand people. We are still tiny relative to my time at Google.

But in ten or twenty years, you could cross into the tens of thousands of employees, and the same challenge of moving the needle becomes much harder.

It is already harder. When you are a startup going from zero to one, growth is intense because there is nothing in the denominator. When you are at thirty five billion in volume, asking how to double next week is wishful thinking.

With developments in AI, I suspect the amount of human capital required per dollar of revenue will keep dropping. The productivity gains are already staggering. Even so, once you are operating at a large scale, it becomes very difficult to double or triple quickly. You gain stability, but you lose speed. It becomes harder for any single person to feel like every day is a major ordeal.

One theme that keeps coming up in these interviews is the idea of killing your darlings. You have to let go of a core belief, sometimes even a core product, to stay oriented toward where the game is going. PayPal did that early on, moving from PDAs to payments, then letting go of PDAs entirely in favor of email. At Affirm, there was a moment around Pay in 4. It was not letting go of a product so much as letting go of the belief that Pay in 4 was not part of the company's future. Walk me through those moments where you have had to change course or release a core belief.

It is a good habit, and one you have to actively cultivate. You have to ask yourself what you believe right now that others do not, and what happens if you are right. Then you have to ask the inverse. What do you believe that others do not, and what if they are right.

That edge is where opportunities tend to show up. Killing your darlings is the dramatic way to describe it. More often, it comes down to deciding what to do and what not to do. Running a company is mostly about deciding what not to do.

The danger shows up when you have a feeling that something does not quite fit the framework you have built, but you have already committed to it. Humans care deeply about consistency. If you are not careful, you stop evaluating the logic and replace it with a shortcut. You tell yourself that you have always done something this way, so you will keep doing it.

Pay in 4 was something I believed was not a useful extension of credit. It felt too close to a debit card transaction, while a longer term loan was about affordability and transparency. I had a well reasoned explanation for why our core products mattered and why Pay in 4 seemed frivolous.

At some point, I had to decide whether I was going to keep telling myself it was wrong, or whether I was going to look at the data. It was clearly working. There are plenty of people for whom getting short term float on a debit transaction is genuinely valuable. It is not the same as a considered auto purchase, but from the perspective of a lender, the distinction between a six month loan for a mattress and a longer loan is not as meaningful as I had convinced myself.

Drawing a hard line around which loan durations made sense and which did not turned out to be a mistake. Recognizing that was an important moment, and moving past it mattered.

Going back to talent, this is something you have talked about a lot, but I want to focus on a subset. The talent that came out of PayPal is well documented. The PayPal Mafia is famous. What is more interesting to me is the people you hired right out of college. The future founders of Yelp, YouTube, and others. How do you identify someone when there is no track record to look at? What was the secret?

It was actually easy. I knew many of these people personally. The shorthand for how we hired at early PayPal was the smartest people in college who were not jerks.

There was another group of people I knew in college who were brilliant but extremely difficult to be around. We all know people like that. You sit next to them doing homework and think, you are clearly twice as smart as I am, but the day we graduate, we are never speaking again because you are exhausting.

Did you know they were smart because of grades, or because you saw the code they were writing?

If you spend enough time around people, you just know who is really brilliant. At the University of Illinois, the group that became the earliest PayPal engineers included people with effortless four point zero GPAs and people with low threes or worse because they did not care about school. They were all strong.

I was active in several engineering clubs. There is a group of clubs called ACM, and I ran one of them. Many of the early PayPal engineers were the smartest people I knew from those clubs. Some would join, become completely obsessed with whatever we were working on, and their grades would suffer. In rare cases, people dropped out of school but stayed active in the clubs, which was odd since they were officially school organizations. These were obviously brilliant people who were simply not suited for a four year degree. Some of them ended up at PayPal as well.

For those early hires, it sounds like you had a personal edge from knowing them. If you zoom out to the entire PayPal Mafia, do you think it was elite talent selection, or was it something about the environment you created at PayPal? Nature or nurture?

A fair amount of it was nature. One of the most telling things we did during interviews was ask people about their plans after PayPal. If it worked out, or if it did not, what did they want to do next?

When people said this was their last job, that was not very interesting to us. When they said they wanted to start their own company right after this, we knew that was what we wanted. These were people with entrepreneurial energy already burning. We knew they would be transient, but they were transient because they wanted to do more of this. They were here to learn how to do it.

So you were explicitly hiring entrepreneurs. Is that different from what you look for now, whether in people you hire at Affirm or founders you invest in? PayPal was small. At scale, it seems harder to do that.

Today I am fortunate to have a large and experienced talent team. We still try to select for entrepreneurial mindset, but it is harder given the scale of hiring. At PayPal, we could say we were going to hire three engineers in the next three months, and they needed to be exceptional. Doing that now, when engineers are extremely in demand and many have well funded AI startups of their own, is much harder.

At the senior level, I still ask people about their long term trajectory. I also look closely at what they have done before. If someone has been part of a very small company or started one themselves, that is a strong signal. Someone who started a company and failed is often a great candidate.

Inside companies, everyone is either a player or a player coach. There are no pure coaches. As you move up the organization, the player coaches want to win more than the players. Entrepreneurs have a natural drive to own the outcomes of their professional lives, regardless of their title. You benefit from that even if they are not the CEO. You can hire a former startup CEO, successful or not, into a more junior role and expect them to be just as driven, just as aggressive, and just as impatient.

I am curious whether there was something about PayPal's culture that was hard to replicate at Affirm, and vice versa.

Because of Slide, my biggest learning was that I over indexed on being nice and under indexed on being intellectually honest. PayPal was a very high pressure environment. Intellectual honesty was eleven out of ten at all times. Niceness was maybe five out of ten. That worked for people who were prepared for the intensity and generally unbothered by heated arguments.

Was that because of the merger with X, or was that the culture even before?

That was the culture. If anything, X was more polite. We were very willing to call out bad ideas. If you are not hearing "that is the dumbest thing I have heard in my entire life" at least once a day, you are probably not in an honest enough environment.

At Slide, I decided it did not have to be that way. We pushed things in a more pleasant and collegial direction. It turns out I overdid it. People were very brotherly and sisterly, but the willingness to get in each other's faces and say "that is a dumb idea, do not do it" was diminished. Part of why Slide was not successful was that we were not telling each other, "This is a dumb thing we are doing, and we should stop."

At Affirm, I approached it from the opposite direction. I needed to bring back that willingness to say "that is stupid." There are better ways to do it. You can start by saying, "Here is something you did that is amazing," and then follow it with, "and now this thing you are suggesting is dumb." You do not have to skip the first part, but you cannot skip the second.

Michael, our CFO, likes to point out that Affirm is at its best when Libor and I are at each other's throats. We went to college together, so our friendship goes back much further. There is no risk of a professional divorce over telling each other that something is stupid.

Another difference between the two companies is your role. By the end of PayPal you were CTO. Now you are CEO. What is different for you?

The CEO role requires much faster recovery times. Being in a startup is a sequence of gut punches with the occasional celebration in between.

As a CTO, you can mope for more than an hour or two. You can leave the building, be alone, and be upset about something. As a CEO, you have to develop a different set of skills. It becomes, all right, that was a gut punch, and about ten seconds later you are back in the saddle.

I remember consciously teaching myself that when the next one happens, the first thing you tell yourself is that this is not the worst thing that has ever happened to you. You have to be able to recover. In chaos, there is always opportunity.

Ultimately, you are the last person in the chain. You cannot look around and say that someone else seems to be standing, so you can lie down. You have to be the one standing all the time. It does not matter how strong your board, investors, or mentors are. You are it. Recovery times shrink until they are almost imperceptible.

The mental game is really different.

Affirm is thirteen years old, which was surprising to me. What does it take for Affirm to last another eighty seven years? And maybe another way to ask it is, what are the biggest existential risks you see over that time horizon?

The good news is that we are building a network, and networks are very hard to destroy.

So it is less about sudden existential threats. There are always competitors. But networks tend to fail by self destruction. You frustrate your constituents. You lose the trust of your customers. Those things do not kill you overnight, but they slow growth and eventually make you irrelevant. It takes a lot of mistakes to truly destroy a network, but it is possible.

Our number one focus is still scale and ubiquity. In our very first fundraising deck, the visual always showed Affirm wedged between Visa and American Express. If we reach a point where we are as important to commerce as the credit card networks, it becomes reasonable to expect that people will simply assume Affirm is available.

For us, that threshold is somewhere between twenty and forty million active users. We are currently at about twenty two million, so we are at the lower end of that range. We are not there yet, but we are getting close. Once you cross that line, the network begins to self preserve.

When you describe it that way, launching a new network that includes lending inside it is something Visa, Mastercard, and American Express are not really equipped to do. That makes the Shopify and Amazon partnerships make more sense in the long term. Wall Street has debated whether those were good financial deals or bad deals for Affirm since your IPO, but if your North Star is a hundred year company, you needed those millions of customers from both relationships to build the network.

That's exactly right.

Do you think the product looks the same a couple of decades from now? Is the core still paying for something over time?

I think it evolves into paying for things more broadly. It may even expand into being a financial decision making engine for consumers.

Businesses are rational, so they like to unbundle financial decisions. Consumers are emotional, and they want something that does more for them. It is a short leap from saying I will pay for this over time to saying I will just pay for this.

The obvious next step, which we will try at some point, is that if this network understands you better than the alternatives and can price things in real time while recognizing what is being transacted, we should be able to offer services like travel insurance or purchase protection. Those are ancillary financial products that tend to be available only at very large merchants and not at smaller ones. That is why networks are so powerful. As you gain ubiquity, you can launch things on top of the network that feel like obvious extensions.

If Affirm is going to last a hundred years, at some point you will no longer be CEO. When will you know it is time to step aside? And who is your North Star as you think about what you are building?

I have told all of my executives, and I would tell any employee, that if they feel I should step down, they should tell me. It is very important for me to know when the founder mandate has worn thin.

There are many reasons why being a founder gives you the right to make tough decisions. Early on, those decisions come frequently. Over time, as you get older and the company becomes more successful, that frequency drops. At some point, you start to recede into future oriented thinking and the parts of the job that are more fun. There is a real risk in spending too much time there and not enough time actually running the company.

The day I hear from my executives that my head is no longer in the game, that I have lost my edge, that is the day I should step aside.

Who do you look up to? Is there a North Star for you?

There is no single North Star. Nikesh Arora at Palo Alto Networks is an impressive sales driven CEO running a deeply technical company. Jamie Dimon exudes leadership and ownership, even though he is not the founder of JPMorgan.

The real lesson is that you have to constantly look for people to learn from. That includes people you admire, but it also includes people in difficult moments. Even people who are about to give you bad news.

Being fired by a merchant is unpleasant. It has happened to me once or twice. When it does, I ask myself how this person is delivering the message. What is their approach? I pay attention. That becomes useful later for hiring, for firing, for managing people, and for managing partners. You can learn something from everyone, even the person who is ending a relationship with you.

If you could go back, would you not have sold PayPal? Would you have kept it as the foundation for everything that came after?

You should not regret things. You cannot bring them back.

I do not think the outcome was wrong. The team was exhausted. The battle had escalated. People were telling Peter and me that if there was a way out, we should take it. We were being asked to go head to head with a much larger company with far more resources.

PayPal's current success and dominance are, in many ways, a consequence of that sale. Affirm exists because I left. Sometimes you have to let go of one thing to build the next.