Max Levchin’s War on Credit Cards

Max Levchin isn’t anti-credit, he really wants you to know. He’s anti-credit card. There’s a big difference.

He will talk about credit cards endlessly, and he’ll skillfully bring it all back, every time, to his company Affirm. Its AI-informed loans, he’ll preach, are much better than credit cards. It’s perhaps unsurprising that Levchin would believe in some form of tech to be the solution. He is a part of Silicon Valley lore, a technologist whose career started in the frothy era of overflowing techno-optimism and rocketed along, landing squarely in this new era—where the future feels a little more, you know, inauspicious. 

On one end of his story: an immigrant from Soviet Ukraine whose family came to the US in 1991 with little more than $600. On the other end: a 2021 Forbes billionaire. A pivotal moment in his career took place in Levchin’s early 20s, when he convinced investor Peter Thiel to fund his then barely-a-company. It became PayPal. (Yep, Elon was there, too.) After eBay snapped up the payments company, Levchin built a cluster of photo-sharing widgets called Slide. Google bought it. Next came the ovulation-tracking app and fertility services company Glow, which, Levchin is fond of pointing out, has helped couples conceive nearly 2 million babies, as though the app itself spawned them.

But even while launching Glow, Levchin kept one foot firmly in fintech. In 2012 he founded Affirm, which ushered in a new kind of consumer lending. Sure, PayPal led the charge in convincing the masses to buy stuff online, but so many people still pay for online purchases with a pre-internet product—old-fashioned credit cards. There are 191 million Americans with credit card accounts. Today, those people collectively owe $925 billion, a figure that took its largest leap 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 loan for their purchase right at the virtual checkout.

Buy now, pay later (BNPL), as that model is called, is having a moment. People are being bombarded with options to finance online purchases through Affirm and competitors such as Klarna, AfterPay, and PayPal, which launched its own BNPL product in 2020. The way these newish financing companies make money: They get paid a processing fee by merchants, who partner with the lenders to encourage sales. They also collect interest or late fees from customers who miss payments, or interest on longer-term loans.

Most of us have to borrow at some point in our lives, and in Levchin’s mind, a society built on BNPL—even if used to finance staples such as food and fuel—is better than one stacked on credit cards. And BNPL services have been built to be appealing and easy to use, so much so that the US Consumer Financial Protection Bureau is studying the potential for consumers to get in too deep. Unsurprisingly, Levchin believes tech can save the day, saying Affirm’s machine learning algorithms will prevent overly risky loans.

While some billionaires are eager to put the world to rights, or launch us into new worlds, Levchin, 47, is the kind of serial entrepreneur who gets obsessive about the thing he’s building right now. Last month he met me at Affirm’s downtown San Francisco office wearing his usual rimless glasses and a short-sleeved Affirm polo shirt. He often steered the conversation to the drawbacks of his sworn enemy (credit cards), but also talked about the ebbs and flows of the wider economy, and how they are increasingly intertwined with the technologies and ideologies of Silicon Valley. The techlash, Levchin reckons, sprang from tech enriching techies but not really making life better for everyone else. Oh, and he eventually shared some thoughts on Elon Musk’s Twitter. The conversation has been edited for clarity and length.

Lauren Goode: The last time that we chatted on the record, Max, was when you launched Glow.