Working Hard & Staying Humble

Interview with Max Levchin

Max Levchin, Co-founder & CEO of Affirm talks about how he has evolved as a founder as the Web has evolved and shares insights of his failures and successes.

July 27th, 2021   |    By: Sarah Lacy    |    Tags: Strategy

I’ve covered Max Levchin and the Web properties he’s built pretty much since I arrived in Silicon Valley in the peak of the dot com bubble. In fact, I spent hundreds of hours interviewing him for my first book, “Once You’re Lucky, Twice You’re Good: The Rebirth of Silicon Valley and the Rise of Web 2.0.” I continually try to get him on stage— despite having plumbed so many of his thoughts for so long— because he’s genuinely one of my favorite people to interview.

Not only does he have one of those iconic immigrant stories that should convince everyone why immigrants make this country stronger, but unlike so many other wealthy success stories, he’s never forgotten where he came from and what it felt like to be an outsider with nothing. Nothing, except his obsession with computers and drive to achieve, that is.

From PayPal to Slide to his current projects Affirm and Glow, Levchin has evolved as a founder, as the Web has evolved and as he’s grown up and become a father. In this on stage interview, he was candid about his successes and failures and his humble beginnings.

There is a lot of entitlement and bad behavior that makes me doubt the Valley’s future right now. But, stories like Levchin’s —  of a kid who came from Soviet Ukraine with less than $1000 to his name — are why I fell in love with Silicon Valley decades ago.

Max Levchin: I was born in Kiev, which is now quite the news worthy destination. Back then, it was just a third largest city in Soviet Union. My mom, my uncle, my grandmother, my grandfather, anyone related to me, except for my father was a physicist. That means that I was raised to be a physicist.

That also means that very few of them actually worked specifically in theoretical physics, which is what they all studied to do.

It was the thing starting in the ’40s all the way through the ’70s, to have a physics degree, that was the hallmark of being accomplished, intelligent since there was no way to be wealthy in Soviet Union. The way you distinguish yourself, especially if you’re Jewish, you get a physics degree and kick ass with that.

My mom worked in a place called Institute of Food Science, something like that. She works in the radiology lab, which means that every day, she would take a food stuff of some sort, and dump it into a giant lead insulated thing, and would look at the readouts, and write it down in a piece of paper with the readouts.

The readouts would say how radioactively polluted the thing was. It was loafs of bread, and eggs, and stuff.

One day, a very exciting thing happened. They trucked in a giant box, which was the soviet clone of a PDP-11. They told her, “You’re going to learn how to program.” My mom said, “That’s exciting.” She recruited me to help her out. My first exposure to programming was something at the age of 11 or 10.

My mom said, “They’re making me learn how to program so that I don’t have to write things down anymore. I can store them in this giant box in wheels.” I can still get around the command prompts in the PDP-11 just because of that.

I’ve got to go to work with her and hack. Eventually, that added all kinds of really crazy decrepit equipment like a Z80. I had one of those things on my mom’s desk, and a Soviet clone of the TI programmable calculator, which was really my favorite computer by far, because I could take it home with me when she wasn’t watching.

Max Levchin: I don’t think I’ve ever told you this story. When I was two or four, whenever I was conscious enough to speak, I told my mom and everybody else that I’m going to be a teacher. For years they were like, “Have you changed your mind?” I’m like, “No, no, no, I’m going to be a teacher. I’m going to teach math.”

One day I said, “I’m going to be a computer programmer.” I remember the change. I was thinking that since I was 9, or, 10, or 11, a little bit after the whole computer thing happened.

This notion of you can tell a machine to do things in the future that you’re only going to know about later on was this profound realization.

From now on, I don’t have to know everything to get stuff done. I can just start writing it down and it’ll happen on its own later. It was like, “This is the most amazing thing ever.” That was basically it. I was never going to be a teacher again.

I never really had access to a computer until much, much later. A vast majority of my programming from the age of whenever that began until about 16 was done on notepads. I just would sit in a park and would write programs, which sometimes would span several notepads.

I developed many games, including my personal clone of “Tetris,” my personal clone of “Snake,” entirely on paper. I have no idea whether they execute or not, because I’ve never actually been able to run them. There’s no computers that can read my handwriting.

I would write it and then [be like] “Mmm…I could do it more efficiently,” refactor my code, rewrite it, all on paper. It was great. Then I would lose the notepads and be like, “Oh my God, my code’s been lost, there’s no backup. My notebook is lost.”

It’s very funny now. Back then it was horrible. One time I left my notebook on a bench in a park and I had to go back to get my code. My mom was like, “What are you talking about?” I’d say, “It’s real.”

Sarah Lacey: Did part of that make you the kind of programmer you are? Did it make you more efficient with code?

Max Levchin: I think so. My standard self-definition as a programmer had always been I started with these decrepit computers, where the most efficient way to write code was to write assembly. I never learned Basic. I never learned C, Pascal. All the high-level languages came into my life way after, and they always seemed like a luxury.

There was not an option to screw it, let’s write a go-to statement. It was all very, very explicit, very procedural programming in various different assembly languages. Probably made me slightly more elitist, but certainly made me very tenacious as a developer. I never really had an option to take the easy way out, I guess.

Sarah Lacey: Tell us about leaving Kiev.

Max Levchin: There were two times. First time leaving was the one right after Chernobyl. My dad kidnapped me from a hospital right after the Chernobyl thing happened. Kiev, for those of you not well-versed in North Ukrainian geography, it’s 90 miles south of Chernobyl. When the whole thing hit, the government covered it up.

My mum and her radiology lab got the loaves of bread from the up north and said, “Holy crap, this thing is glowing.” She was one of the very first people in Kiev to see that food coming out of northern Ukraine was badly contaminated, bad in the fact that every fire brigade and every ambulance was just streaming out of the city going north the entire day and night after the accident.

The government was like, “Oh, nothing to see here. No worries. Soviet Labor Day is coming up so get ready for the big parade.” It was a terrible idea because there was a big rain, and there was one of the very first acid rains.

Anyway, my parents figured out something happened. They stole me out of a hospital without getting doctor’s permission. They threw me onto a train and sent me about 1,000 miles south to Crimea.

By then, it’s been 48 hours since the accident. By then the word spread. These make shift Soviet police doctor ambulance type set ups that would screen people coming off the trains from the North. Parents were putting kids in trains saying, “Get the hell out, kid. Get the hell out of…” whatever the northern cities were.

They would try to figure out what to do. It was mid ’80s in Soviet Union. No one had any freaking clue what this means, radiation. I grew up in a family of physicists. They were like, “Oh, shit. We’re measuring these things in microfarad. That is not good.” I came off the train with my mom.

There’s a dude with big Geiger counter like a stick. He’s literally going up and down. All right, it’s cool. It’s cool. He got to me and like [beeping sounds]. Nobody seems to care except for my mom who was like, “Oh, no. Something is wrong.”

This pantomime ensues where they keep on switching to a lower resolution, because the thing is beeping too frequent which means it’s picking up too many particles per second. At some point the guy with the stick goes, “It’s in his leg and we maybe have to cut it.”

My mom to her great credit said, “Try it again with his shoes off.” It turned out that I stepped on a rose thorn while I was escaping the hospital. The rose thorn managed to pick up enough of the acid rain fallout to trigger a radioactivity.

In retrospect, I’m confident whatever it is it was picking up was not nearly enough to be dangerous, but no one knew anything about radiation in the mid ’80s in the rural Soviet Union.

Anyway, it was pretty terrifying, but it was definitely one of these bright childhood memories where I almost lost my leg to a crazy guy with a Geiger counter. I don’t think anybody else has one of those.

I have never seen that shoe again. I have flashes of memory from that time. Once you’re hitting 40 which is roughly where I’m at now almost, a lot of your memories begin to crystallize into things that almost feel untrue but are so much brighter.

Sarah Lacey: Tell us about coming to the US. No body parts almost got chopped off?

Max Levchin: No body parts. We did have an incident with the border guard. My grandmother had an old very, very, very cheap piece of tin jewelry that got stuck in the lining of her handbag.

In the last second, we have all of our possession or whatever we could possibly take out, and had been sitting in the Moscow airport for 48 hours waiting for final permission to leave the country. We just went through this whole big like, “You know you’re leaving Soviet Union for the last time. You will never be allowed back, you’re a traitor to your whatever.”

We’re like, “Yeah, yeah just let us go, we’ve got a Pan Am flight.” The final, final thing is you go through the X-ray and this guy like, “Contraband.”

We’re dirt broke and have been as long as I can remember. Like, “Contraband, what do we have?” This is exciting. This guy is tearing apart my grandmother’s handbag. She’s actually– unfortunately not with us anymore — but she’s a very feisty lady.

She’s like, “What the hell are you talking about? What contraband?” He’s like, “In your bag.” He tears open this thing. There’s this broach or something, but it’s obviously made of the same stuff they make tin cans from. “You were trying to smuggle this out.” Like, “You can have it.”

My family tried to leave Soviet Union a bunch of times, mostly unbeknownst to me because I guess they I felt I might tell my friends. I actually found out we were going to immigrate after the final, final time of getting permission to enter the US.

It was one of these crazy years where I knew for about 12 months we were going to leave the country and I couldn’t tell anybody. My friends were like, “Hey, where are we going to go for the summer? What are we going to do?” You don’t really want to lie to your best friends. I had to go and tell one by one, “Hey, so I’m going to leave.”

They were like, “For three months?” Like, “No, I’m just going to leave. Midsummer 1991, we’re going to go and we’re not going to come back.”

Sarah Lacey: How did you feel about that? Did you get that it was much better for your family to be in the US or were mad about leaving what you knew and your friends?

Max Levchin: I was 100 percent naive. I was like, “Cool, America. They have computers.” I was 150 percent invested in this like, “I’m going to write code.” Literally, if they told me they have better computers in…I don’t know, choose some obviously bad place to go, I go, “Mm-hmm, let’s go there.” Like, “Yeah, more of a shithole, but computers.”

All these things are now quaint because they almost don’t feel mine. On the Pan Am flight, I got reprimanded by the stewardess. I kept on running into first class. Of course, we flew economy because that was sponsored by the whatever Jewish help agency bought our tickets to come to the US. In the first class, they had a whole rack of magazines. They had a PC shop or one of those things. I snatched one off before the stewardess would stop me. She’s like, “You’re not allowed the mag-.” I ran off.

I spent the entire flight flipping through the back of the magazine asking my mom like, “How much money do we have?” She’s like, “We have $733 for the entire family. It’s all we got.” Like, “This computer is 650 bucks but it doesn’t have a monitor. Do you think we can buy it?” Like, “Are you on drugs?” She’s like, “You’re totally crazy, aren’t you?”

Like, “You understand that we have no jobs. We have no idea where we’re going. We have no place to live. We have a guy who is vaguely related to a relative that’s long dead in the old country. He said he’s going to put us up in the same building. We have no idea where we’re going to be tomorrow morning and you want to spend 90 percent of the money we have on a computer?”

Sarah Lacey: With no monitor.

Max Levchin: With no monitor. Like, “I’m sure I’ll figure out the monitor somehow…” The other thing that was awesome is when we were stuck in the Moscow airport for 48 hours…This is completely immaterial to the whole story, but it’s a random detail. In Soviet Union, they pegged ruble to a dollar for the longest time.

Whatever money we saved up to go was going to be $7,000, which at the time in the ’80s was a meaningful amount of money. Then literally a week before we boarded the plane, Soviet Union randomly changed the exchange rate to one-tenth. We went from having $7,000 in a plan to $700, which is why we had so little money.

Also there was a limit. You couldn’t change anymore rubles for dollars because that’s what the government said. We had a heap of Soviet money we knew we couldn’t spend. In the Moscow airport we were sitting around going, “What do we do?” like, “Hey, can I buy this mom?” She’s like, “Normally I’d say no we’re broke, but go ahead.”

The only thing you could buy would be consumables or you could watch a video. Back then in Soviet Union you could do two things. Either watch crappy Soviet cinema or profound Soviet cinema.

In Moscow airport, for 48 hours, I got to watch all kinds of animation that was all contraband. The two things that really stuck with me were “Teenage Mutant Ninja Turtles.”

I was like, “Oh, my God. This is America. I get it. America is this.”

We landed in Chicago. I was wearing a giant fur coat. This was 18th of July 1991. The reason I had a fur coat was because it was one of the ways of getting stuff out of Kiev without having to declare it.

Everyone in my family was wearing it. It wasn’t [really a] fur coat. It was one of these stuffed down coats which we immediately tried to sell to some underground Russian buyers of such things for very, very little money.

I was pretty fluent in English when I got to the US. I had a very thick Anglo Russian accent. I knew that I had an accent. I knew the stewardess asked me three times what I meant. I was very clear about the fact that I was not easily understood. One of the early goals was to learn to speak English with American accent, which I figured out pretty quickly.

The other immigrant kids around the neighborhood and the ones that socialized with non-Russian speakers were the ones that had obviously figured out how to speak English without an accent. Like, “I’m going to obsess with this.” I was going to figure it out. I decided that the easiest thing to do would be to just mimic.

I played clarinet growing up. I was like, “It would be easy to copy lip movements of someone who speaks English well.” All I needed was a constant example of someone who spoke English well. I got a TV, which we couldn’t afford. I pulled one out of a trash can because it was broken and I fixed it.

Growing up in a family of physicists, you can always lean on anyone of PhDs and theoretical or applied physics that you have next to you. Like, “This thing is not working.” “Change the polarity and you’ll fix it.” That was done relatively quickly, and then I had a black and white TV that I sat in front of.

All I really needed is something to copy consistently. Of course, this is a crappy apartment that my not-really uncle put us up in. There was no cable. I picked the channel that had best reception with my bunny ears antenna. I watched something that would come on in a predictable time right after I come back from high school.

You can guess it was basically a sitcom replay from the ’80s. I got to high school. This was seven weeks before the school year started. I got to high school. I sign up for my classes. It was a very, very multinational, multi-cultural high school, lots of Russian immigrants. It was pretty easy to blend in.

Nobody really asked where you from because everybody was from somewhere. Lots of Russians, so I generally felt at home, I got a bunch of tests in. I immediately place out of all the math stuff. I felt pretty good.

Then you had to take band. I go to band and band is run by this great guy, Mr. Harris. He played the bassoon. He was just a very nice guy. He was like, “All right, play a little clarinet for us, Max.” I played it like, “All right.” He basically promotes me to first chair instantaneously.

I was like, “Holy shit, these guys are going to hate me.” They were like, “Stand up and talk about yourself a little bit.” I talk about myself a little bit and blah, blah, blah. “Oh, yeah. Great.”

Then [he says], “See me in my office after band practice.” I go to him, he’s like, “You’re a good clarinet player. I got a question for you, why do you talk like a little black kid?”

I just said, “What?” Then he, “Say that again.” I said, “Say what again?” He said, “What did you just say?” I said, “What are you talking about?” He said, “Say that again but say it fast.” Then, “What are you talking about?” Like, “Did you learn English by watching Different Strokes?”

This is an entirely true story. Nothing in this story is in any way amplified or exaggerated. I chose Arnold from Different Strokes played by Gary Coleman as my mentor for in English pronunciation. I wish I was making this shit up but I spent another six weeks retraining myself.

He’s like, “All right, that’s a great approach. As a clarinet player, you did exactly the right thing. You know how to control your lips. I got an idea for you. Find seven o’clock news and copy those people.”

I got really good at speaking like a weather announcer.

Cultural differences are very real. The idea of having to use deodorant was brand new. I wish I was making that up too.

Sarah Lacey: When Google decided to pull out of China, Sergey said a lot of it had to do with growing up in the Soviet Union. When WhatsApp sold Facebook there were a lot of stories of…Privacy was really important to us because this is why we don’t store anything on servers.

Did it have this privacy effect on you?

Max Levchin: I suspect it’s actually similar to my story. My grandparents on the maternal side were both very prominent physicists. The notion of “The government is right there. They’re not malicious, they’re just malevolent.” is very real. The idea of “One day someone might come and they’ll take you away and you’re not going to come back or you will, but it’s a good idea to just stay in line or better yet hide.”

That is very real. The notion of…I’m a computer science major but my area of specialization was cryptography. I’m pre-programmed somewhere to like secrets, to keep secrets, to keep people out of my knitting. In that sense, I think it’s probably real.

Sarah Lacey: Let’s fast-forward to you moving to Silicon Valley. You were at University of Illinois. Netscape had come out of Mosaic was that it was what the schools in the time you were there for computer engineering. You knew you wanted to come to Silicon Valley.

Max Levchin: Yep. That was pretty awesome. That was probably the greatest luck I’ve ever had in my…That’s actually not true. I’ve been crazy lucky a million different ways. One of the luckier things that has happened is I got accepted to University of Illinois. I really wanted to go to MIT. This is actually a funny story.

I was in high school. I went to my high school guidance counselor. I said, “I really want to get into MTI. You have to get me into MTI.” She’s like, “What the hell is MTI?” I said, “Massachusetts Technological Institute. It is great. It has the best computers.” She’s like, “OK, I’ll try…It does not exist.” I said, “What are you talking about? I read about it.”

I went to this amazing show when I was a kid called Computers In The USA. It was actually in Kiev back in the Soviet days. It was basically just a giant promo for Apple. I got to play with Apple computers. It was freaking amazing.

I went home and I was like, “All right. The one thing I picked up from this is the really, really cutting-edge stuff happens at MIT.” Except it was all translated and in Russian it was MTI.

I begged and pleaded to get me into MTI and finally, she was like, “I got nothing. MTI, I don’t know, but there’s a thing called Illinois Institute of Technology.” She was like, “Well, that’s the safety school for people who apply to University of Illinois at Urbana-Champaign.” I was like, “Oh. What is that?” She was like, “It’s a good computer science school. Maybe you could get in there. I don’t know. Your English skills are pretty shitty but your math is great.”

I applied after the deadline. This is junior year, pretty early but it’s right around the retraining from Arnold and all that craziness. She’s like, “You could probably apply as an international student, they wouldn’t be able to tell the difference because [of] your accent.”

She applied for me as an international student. The cut-off was later, and I got in by the skin of my teeth to U of I and got on campus a year later.

It was 1993, this is right after Mosaic 0.5 or 0.7 came out. As soon as I saw it I was just like, “Whoa. Oh, my God, the world is completely different.” I remember looking into a box outside.

Champaign is very cold in the winter and very hot in the summer. It’s very bright in the summer. It was the Quad Day, which is when all the student clubs bring out their wares and try to impress incoming freshman, try to get them into clubs.

The club I wanted to get into was Special Interest Group for Computer Science and Special Interest Group for Computer Graphics. My first experience looking at Mosaic was actually looking into a big cardboard box, because it was so bright and the screens were so crappy that you really couldn’t see anything unless you surrounded yourself with darkness.

I was peering into this box and I was like, “What is that?” He was like, “That’s Mosaic, NCSA makes it.” Out of that, I met Marc [Andreessen] and all the characters. That was super amazing. Then, by ’97 when I was graduating, basically if you were a good student in computer science you were figuring out the cheapest apartments in Palo Alto.

That was it. I was like, “Just got to find a way.” Between freshman and the time I actually got into a truck and drove to Palo Alto I had started and failed at four startups. I was full on startup material. I was like, “Just go to Palo Alto.”

Sophomore year or midway through sophomore year is when Marc and the treacherous six left to go and start Netscape.

By the time I was graduating it was like, you go to Palo Alto, you start a company. It’s crazy cool. I stuck around Champaign a little too long. Somehow I waited until ’98. I think it was because my girlfriend was trying to graduate or something like that.

By the time I finally landed in Silicon Valley it was actually the last days of the heyday. By ’99 it got really hard.

Sarah Lacey: Yeah, you guys were late in the heyday and you went public but everything else was cratering. You almost had this different trajectory of everybody else. What was that like to feel out of step?

Max Levchin: It’s very tempting to elevate the story or create a narrative around how we persevering in spite of…I think we’re just so busy working really hard. Just chronologically, raising Series A for PayPal was incredibly hard.

It was mid ’99, the first series seed came from Peter Thiel himself basically. He was managing a tiny little hedge fund. He decided on the spot to fund our little fledgling enterprise. The fund was supposed to be trading public equities but he was a doing a little bit of private stuff on the side. He was like, “I’m just going to invest in this thing. I’m going to be the CEO, it’s totally safe.”

Half a year later we had to go for real fundraising. This was mid ’99. It was bone dry in Silicon Valley. I remember the standard thing, back then anyway, you go to Sand Hill Road. You go up and down Sand Hill Road. You try to raise money. If you get rejected you start looking around up and down the peninsula.

You get rejected, you start looking really far and at some point, you start driving to Saratoga where they have things like red roof ventures and things you may or may not have heard of.

I remember driving to Saratoga very vividly and being told no one will ever take a payments company seriously, because there’s just no money in it. It was really deflating.

The original thing was crypto. My background, my senior thesis was in cryptography and data security. I met Peter randomly at a Stanford lecture that he gave. We started conversation afterward, mostly because everyone else who went to that lecture was crazy.

We walked out to the parking lot and talked about my various failed startups and he’s like, “Hey, let’s get together for breakfast and talk about what you’re going to do next. Clearly, you’re going to start a company and I invest in companies.” We met up at Hobee’s on Embarcadero.

I met Peter for breakfast and I pitched him two completely different ideas. One of which was lame but the other one was, I have all these ideas for crypto and I was one of the very first developers of the PalmPilot. This is before WiFi actually, before any form of communication. This was a PDA with no connectivity other than a plug in its ass to sync with a computer.

I was like, “One day everyone is going to use these at work.” Which I will argue is true, mere 16 years later. He was like, “Yeah. That sounds too good.” I was like, “Well, what do you think they’re going to do when the man is going to try to read their documents? When their competitors are going to try to steal their secrets?”

He was like, “Well, I don’t know.”, “They’re going to encrypt it and I’m going to invent all the crypto.” He’s like, “That sounds like a great business, are you going to start a company?” I’m like, “Sure. That sounds good.”

That’s basically the birth of PayPal in that conversation. I built tons of code for the PalmPilot.

We did crazy stuff on it, like we generated RSA keys of real length, and signature. They were like, “No one will use this on the enterprise. This is a personal device. It has a calendar, it has notes.” We were distraught for the first time. We’re starting to run out of money, so we had to go raise. We basically went pretty rapidly through a succession of ideas around “What else can you do with a handheld device and a whole bunch of really good crypto?”

We went from one thing to another to another, but at some point we ended on you could make IOUs that were digitally signed and were really secure. I could actually sign something saying I owe you five dollars. By then Palm Pilot had introduced infrared port, so you could actually beam someone a promissory note that was cryptographically signed. That was the product that we got funding for.

In mid-’99, our first round of financing was around this product that you could use to send someone a personal IOU and then when you would sync the Palm Pilot to a computer, the IOUs would get settled over the Internet. It was fundamentally secure.

In fact, it was so secure that the money of our first round was actually beamed in Buck’s of Woodside from Palm Pilot to Palm Pilot. It was actually real six million dollars changing hands. We made a big splash out of it, because it was the first time money was transferred electronically, which in the age of Bitcoin sounds very quaint.

We were very excited about this, and we did this. One of the TV crews was like, “We got a very bad angle.” When your venture capital is John Malloy from back then Nokia Ventures, now Blue Run Ventures, great guy, was beaming the six million dollars to Peter…” we couldn’t quite get it to screen. Can you guys do it again?”

It was like, “Are you fucking kidding me? This is cryptographically secure, of course not. He would have to give it back to him and that would nullify the financing on it.”

I was flabbergasted. I’d also been up for four days in a row. I was cross-eyed and I would not have any of it. Finally the guy’s like, “I get it. I get it. You’re a nerd. Can you guys pretend that he’s beaming you…” Peter like, “OK.”

Why did I stay up all night verifying the validity of all this security if you guys are going pretend?

This was my first encounter with TV news.

Reid [Hoffman] was like, “Look. Not everybody has a PalmPilot. Everyone’ll have a PalmPilot very soon now. I think they have about two million units in circulation. The Web is bigger than that. You should do it.”

We’re like, “All right. Fine.” We slapped together a web demo. Then we started noticing that there was a fair amount of actual money traffic changing hands in the web demo. We were trying to figure out where it came from and realized that it came from eBay.

My first reaction to it was by the time I was both head of product and head of technology for the company, and I was like, “Oh, as head of product I’m going to ban this kind of transaction because this eBay thing is scary. People are trading random stuff. It’s like a second-hand marketplace. I don’t want anything to do with that.”

I tried banning it, but they kept on figuring out how to use it. Finally I saw an email from a seller that said, “Is there any way I can get a smaller version of your logo so I could promote you guys because I want my users to use this stuff?” At the same time roughly Luke, one of the earliest guys, invented this idea that we could give people $10 to sign up.

It sounds like a crazy idea of giving money away to people, but if you’re running a payment system, you’re just seeding money into the system. They’re going to use it inside more often than not especially if you make withdrawals pretty difficult. PayPal is still hanging onto that idea today.

They’re like, “Hey, so if you guys are going to give 10 bucks for free to me every time a buyer comes along, I’m just going to give them free shipping ’cause that’s what they crave. They don’t understand $10 off, but they get free shipping. They love that.” That was basically the original explosion of PayPal on eBay. Everyone got free shipping, and everyone got $10 to sign up.

Sarah Lacey: Why do you think you and Peter made such a good team?

Max Levchin: I think we were basically always trying to impress the other. There was some sort of a weird thing going on where we were like, “I’m going to prove to you that I’m at least as cool as you are,” which implicitly means, “I think you’re really fucking cool, and I am pretty lucky to have someone like this on my side.”

We would basically throw puzzles at each other and escalate the difficulty of math puzzles to see who could stump whom.

It was never about, “Here’s a hard one that I think you can’t solve.” It was, “Here’s a hard one that I solved, let’s see what you’ll do with it.” I remember both of us giddily explaining to the other person when the other person seemed ever so slightly stumped, “Oh, well now I’ll show you that I solved it and I can help you with that.”

Yeah, it was a little bit childish but it ultimately made for this great dynamic of, I need to outdo myself every time because I know the other guy has the high standards for himself.

I think that’s probably what spread into the team as well. We kept on bringing out the smartest friends we had, the most productive programmers, the most amazing business people, the best economic brains that Peter knew at Stanford. The best computer scientists I knew at University of Illinois.

We’re always trying to outdo each other on every front in the biggest way and, of course, that dynamic percolated down into the team itself.

Sarah Lacey: Let’s talk about what you are doing now with Glow and Affirm, two companies that play more to your strengths than Slide, which became about social games and sold to Google, ultimately as a disappointment.

Max Levchin: Slide was a disappointment, and I think it would’ve always been a disappointment because I just don’t care about games. I played a really good game, because I had to, but it drained the crap out of me, because I couldn’t play games if my life depended on it. I was never good at it.

I got to where I got to, but I don’t think there was ever a choice where I could’ve just flexed some more and got Slide to be bigger.

We were generating revenue, and we were building games and making products but people around me that had far less stock and worked probably harder than I was at the time, cared more about their products than I did.

It’s impossible to run a company into great scale unless you’re deeply passionate about what you’re doing. Elon wants to die on Mars. He would. Not because it’s a fun thing to do, to die but because it’s on Mars, and Mars is fucking important. He wants to make humanity an inter-planetary species.

That may or may not be your cup of tea, but that’s what he wants to do. He’s probably going to be infinitely more likely to succeed than anybody else I know. He also deeply cares about dependency on Saudi oil.

That’s what makes him a good CEO for those two companies.

Sarah Lacey: Do you think you were chasing the wrong thing as success with Slide and do you think that was important to get out of your system after PayPal?

Max Levchin: That’s how I normally explain it to myself. I measured success pretty much since the day I started building startups, in the number of people that used my product and thought it was good for them, good for their lives, improve their lives.

For a relatively significant amount of time, Slide was an incredibly sizable population of viewers and watchers. We were seventh largest property on the web, just below Wikipedia and above Amazon, or the other way around, whatever it was.

At the time, it was very fashionable in the world of media startups to say, “Well, here’s my audience, and here’s my revenue potential, so hey, I’m important.” I believed that at the time, and it did not play that way at all for a variety of very good reasons, but that was actually not what I was secretly measuring myself against.

I said in the very beginning, the goal was to top PayPal, and I pretty quickly woke up and said, “Oh wait, no. Actually the real goal is to get a big group of people to benefit from what I’m working on everyday…” but somewhere in the back of my mind, I was like, “…but it also has to be bigger than PayPal.”

As a result, I probably steered the ship a few times towards valuation as a target, versus just a pure goal to improve the world. That sounds very trite, so I’m cringing on the inside for saying it, or not so much on the inside anymore. If anything, I got that out of the system, that the mistake of, “Go for the valuation and everything else will come,” is completely not true.

Sarah Lacey: Did you want to quit?

Max Levchin: No.

Sarah Lacey: Did it ever occur to you, “This is just not what I need to be doing, this is not playing to my strengths. This isn’t working, this isn’t gonna be PayPal. How do I get out of this?”

Max Levchin: All those things occurred to me, many times. I never thought of quitting, ever.

Sarah Lacey: Were you relieved when the Google deal happened?

Max Levchin: Yes, although the other option would’ve been to recap the company, potentially take some blood-letting on the cap table and continue, and I would’ve done that. I was relieved largely because I looked around my executive team and beyond, and I saw people that I exhausted. I put them through the meat grinder of, “Work hard or go home,” for years.

I saw that the probability of success was probably not increasing, certainly not increasing as fast as they needed to regain confidence and to reenergize. It would’ve sucked if they all had to go home after years of working super-hard with nothing to show for it.

It’s also why I was never considering quitting. Just like PayPal, I recruited many friends and I made more friends, the thought of leaving never crossed my mind, that was not an option. I was relieved largely because I finally said, “Look, I may have been leading you through the desert, but here’s a bit of an oasis.”

Sarah Lacey: Let’s talk about what you’re doing now.

Max Levchin: As you know too well, or documented rather well, after PayPal, after the year of craziness, I started an idea incubator or a lab, Idealab, for myself, called MRL Ventures. After Google, I pretty much knew I wanted to go back through that process and do another one of these. I learned a ton and it was really enjoyable, that’s where Yelp came from, that’s where Slide came from, so I knew the framework of what I wanted to do was very much like that.

I didn’t want to call it MRL, which is my initials, so I called it HVF. HVF stands for Hard, Valuable and Fun. It is still around, still brainstorming some pretty amazing ideas, prototyping some crazy cool stuff.

It’s been around for two years, and in those two years, as per my plan, we have spun out one company per year. It functions as a place where my smart friends and I sometimes get together, sometimes some people just stay for a while. We brainstorm and we try to come up with crazy, cool stuff.

This time I had a much tighter focus on what I really wanted to do, certainly not games, predictably. I made a list of industries and problems that I wanted to solve, that would be worthwhile, where the measure, really, would be number of people impacted. Even if I failed, it would be OK, I just wanted to go for broke and go dent the universe, to use the unfortunately very beaten term at this point.

One such thing pretty quickly, and this just came out of a conversation with my wife, Nelly, I liked finance. The consumer finance, the fact that we live in the world of big banks that are too big to fail, the fact the your credit card still functions like it was invented in the ’50s, because it was, all those things that motivated and shaped PayPal, they’re still true.

PayPal took a bite out of it, but it was actually a relatively small bite. There’s close to a trillion dollars’ worth of money going through Visa, PayPal doesn’t even come close to that, or these days it’s closer than before, but there’s just still a lot to do.

The first company we spun out of HVF is Affirm, and the goal, really, is to go for the long play of revolutionizing consumer finance. We started by creating, unpredictably, a merchant payment product, that essentially turns any purchase, if consumer wants it to, into an installment loan.

If you’re buying something and you’re a student, and you’re using a debit card, you just don’t quite have enough money, we’ll step in and lend you the money for this transaction on the spot, in real time, evaluate your credit, evaluate who you are based on something as simple as your cellphone number, and create a simple loan, either a deferral of payment, or you can just wait for 90 days, something that your credit card or your debit card wouldn’t let you do, or split it into chunks.

The whole idea, it sounds very basic, but if you try to think of how to do that today, unless you’re going, for instance shopping where they’ll offer you in-store financing on shitty terms, you can’t do that. We’re trying to bring that, it’s starting to bear fruit and it’s pretty awesome. The long-term goal is to just attack the whole thing.

I spend most of my time on Affirm these days, in partly because I like consumer finance so much, in part because I like the team. There’s all these guys and girls that I worked with before, and it’s a little bit like getting the band back together, except we’re all close to 40 and have kids. We also need to work just as hard, which is very good.

The other thing that we did is, just a little bit later after Affirm, we spun out another company called Glow, which is run by a guy named Mike and his team, that are all in Shanghai, China. A strange place, but it is there because Slide had an office in China, and that entire team left and started Glow with me.

Much as I love talking about it from the perspective of, it helps women conceive when they have a hard time conceiving, it’s fundamentally health insurance play. We’re starting with reproductive health issues, but we’re ultimately focusing pretty broadly on women’s health, in general, and we’re trying to reinvent health insurance as it applies to women’s health.

Both cases, Affirm and Glow, operate on a fundamental thesis that we live in a world of data, and in fact, HVF is, really, the whole idea of this  incubator, is that we are under-utilizing data. We could be doing so much more with information that’s available to us. The obvious thing to do is to know more about something that’s dangerous, the price to risk more correctly.

Sarah Lacey: I remember talking to you, when you were in the early days of Slide, and I feel like you were always trying to come up with existential ways games were important. This is about self-expression… it seemed like every time there was a new thing.

Max Levchin: It’s pretty easy this time around. Health is important, consumer finance is important, both seem to be pretty fucked. Both are really hard, both are fucked. I’m going to fix them.

Sarah Lacey: What is success for you this time?

Max Levchin: Success this time around is back to what it should be: the number of people whose lives are impacted for the better because of the software and services that we build.

About the Author

Sarah Lacy

Sarah Lacy is the Founder and CEO of Chairman Mom and Pando Media. She's been covering technology for nearly 20 years, previously for BusinessWeek, TechCrunch and many other publications. She's the author of "Once You're Lucky; Twice You're Good: The Rebirth of Silicon Valley and the Rise of Web 2.0" (Gotham, 2008); "Brilliant, Crazy, Cocky: How the Top 1% of Entrepreneurs Profit from Global Chaos" (Wiley, 2011) and the forthcoming "A Uterus Is a Feature Not a Bug" (Harper Business, 2017). She lives in San Francisco.

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