#869: Max Levchin, PayPal and Affirm — The Path from The Soviet Union to Building Multi-Billion Dollar Companies (Plus: Real-World Socialism vs. Capitalism)

Transcript from https://podmenti.com/t/87d5211df3ec069f

Hello, boys and girls, ladies and germs. This is Tim Ferris. Welcome to another episode of the Tim Ferris Show, where it is my job to interview and deconstruct world class performers of different types. And my guest today is someone I've wanted to have on for a long time, Max Levchin.
Max was born in Ukraine before moving to the US and settling in Chicago in 1991. He taught himself how to code with a pen and paper with a pad.
Of paper and a pen under trees in parks. And from those humble beginnings
He has gone on to do a million different things. He founded a firm and slide. He helped create.
Yelp, and I'll come back to a few of these. He co-founded PayPal along with people you would recognize like Peter Thiel and Elon Musk and others. He co-created the capture of the first.
commercial implementation and
He
Has now
Invested in more than a hundred startups.
Computer scientist, serial entrepreneur, philanthropist, he does it all.
He is also the co-founder and chairman of Glow, a data-driven fertility company. A firm in Glow were both created and launched from his San Francisco based innovation lab, Sci-Fi VC. And in 2002, not surprising, given everything I just mentioned, he was named to MIT Technology Reviews TR100 as one of the top 100 innovators in the world, as well as innovator of
the year. And in this conversation, we get into a lot of details of
How he thinks about
Productivity, scheduling.
His other obsessions how he applies his
meticulous tracking and performance orientation to other things. There's a lot you can use.
Quite a few laughs, we get into the power of fiction.
Why time is a zero sum game?
And in some cases
Pain with a smile. What does that mean? We're gonna find out. So you can find all things max at levchin.com, L E V C H I N dot com.
and a firm you can find at affirm.com. And almost certainly you have used or you have seen a firm. A firm is the payment network that empowers consumers and helps merchants drive.
growth. And we also get into being born in Ukraine and having front row seats to socialism. What does it actually mean to compare socialism to capitalism? What does it look like in real life? Well most people
Treat that as a theoretical exercise.
And Max has lived both and can tell you all about
comparisons. So with all of that said, what a preamble. Let's get to Max Lavchen.
Thanks for listening. Enjoy.
Optimal minimal.
At this altitude, I can run flat out for a half mile before my hands start shaking. And then I also do post my question.
No seeming.
My cybernetic organism, living tissue over metal into scale.
No
Max, it's nice to see you.
And I wanted to kick this off with a uh thank you, believe it or not.
From
what you put into my last book, Tri of Mentors, and it was in response. You had several responses to this, but it was in response to the
Metaphorical billboard question. What would you put on a giant billboard anywhere with anything on it?
What would it say and why? Any quotes you think of often or live your life by. And there was one that I had never come across because I had never seen the movie Ronin.
And the line was Whenever there is any doubt, there is no doubt. And I have come back to this.
After watching the movie, so many times it's hard for me to even give you an accurate count or even estimate of a count. But
Perhaps we could
Give people some context.
Why was this one of your answers to that question? It's a great quote. I love that quote. Yeah, so good. The next line in the movie. That's the first thing they teach you.
I'm only showing off.
Because I love that quote so much too.
It's a great quote. Encapsulates so many different flavors.
It's like don't doubt yourself.
The real meaning here is you know the answer. You may be
Too scared to
Embarrassed to

embrace the fact that you know the answer, but you know the answer. So like l let's not mess around, you know the answer. That's layer one
Layer two
Is
Make a decision already. Layer three is
Even if it's unpleasant.
You're gonna have to do it anyway, so don't delay. There's just like so many flavors of the same idea over and over again, encapsulated beautifully in just a few words. And so I I think it's a great succinct.
Line.
The other thing I I'm a huge fan of
Studying leadership.
Fantas leadership sounded weird, so
I love leadership.
Relate it.
Lessons.
And
Yeah.
Two movies where leadership I think is or th I'm sure there are more than two, but like two of the movies that I fall back on for leadership content is Rodin.
And seven samurai.
And Samurai is hard to quote because it's in Japanese and you can you vote a translation. Unless you're a native speaker, which I'm not. But
Ronan is in English and so it's great to quote. There's a lot of
Other great lines, but that's the best one.
And one of the
layers of explanation that you added to it, which I ended up applying. It made it very concrete for me, which I think you've already done, but it was when you aren't sure, I'm quoting from
What?
You put in the book here.
is when you are aren't sure about a key employee or a co founder, odds are exceedingly low your mind will be changed for the better.
And the way I translated that for myself and I kept thinking of this and I modified it slightly for myself, like
If there is any doubt.
There is no doubt. Just to say
That
If you are analytically trying to convince yourself of something that doesn't feel
Right.

And you have to cross examine that quote unquote intuition sometimes.
But
Chances are you know the answer, particularly, at least in my experience with
employees and hires.
Yeah.
It's always.
I should have done that a lot sooner, at least in my very limited experience. You have infinitely more experience with that.
So thank you for that. And
On the
Japanophile angle of things, having lived there, I'm still very close to my host family.
Who I stayed with when I was fifteen.
I am no longer fifteen, I think some people will realize.
But I was wondering, have you ever seen the movie Paprika?
This is an old
Anime. It's from two thousand six, I believe.
I don't think I have. And if you haven't
it might be interesting. It will be not too much of a spoiler because there's so much around it, but
Here's the basic premise. Psychiatrists invent a device call the DC Mini that allows therapists to enter and record patients' dreams.
And then when the prototypes are stolen by an unknown dream terrorist.
A B and C starts to happen. What's crazy about this is that there are actually researchers in
Kyoto in Japan.
Who have been using FMRI.
And
Waking dream subjects.
to try to use machine learning to then correlate.
Brain activity.
to content. And they've made
Some surprising
progress with being able to do that. It's still very, very low resolution, but I don't know how far away we are from being able to do
Something.
Like is depicted in paprika, which is pretty crazy.
I used to be uh
A voracious consumer of
Both manga and anime and
It turns out that's the thing.
Time is still a zero sum game for most things, and so I've drifted off my
Weekly.
supply of Japanese content production, but I will definitely make room for that one.
The thing with FM R I and
Brain.
Modelling.
At least last I look at it.
Before I sort of picked to do
The thing that I'm doing now with a firm
I actually look pretty seriously into I'm I'm a huge sort of a
Closet fan of
brain, computer interface and
All sort of.
Surrounding.
Ideas and opportunities.
I've looked on and off at FMR and all the other sort of stuff in a domain, and it just seems that
You're
Cranium is too dense. It's hard to get signal of in like very superficial
Yeah, connectivity from and you have to like shave your head, which you've done.
Yeah, I face that one.

I'm not yet prepared. Of course you have to experiment on yourself, otherwise what's the point?
But
I'm actually pretty excited about some of the newer things happening in brain computer interface, specifically in things like ultrasound, because I think we're finally looking at
Penetrating is a scary term. I I don't mean that like physically penetrating, but getting into, you know, a few inches into your brain versus just scanning the
Current of the top of the skull is exciting.
Yeah, for sure. And looking at neuromodulation, things like focused ultrasound could hit, say, the nucleus accumbens for various substance abuse issues or addiction issues and so on. So it's pretty exciting.
Definitely uh
front and center of a lot of really cool research in
Feel like we're
Hanging around in the same way.
It also sounds wrong, but probably hang out in the same circles. Yeah.
I want to actually
stay on the fiction thread for a minute because I was actually hanging out.
Yeah.
With one of our
I suppose many overlapping.
Connections.
Luke Nosak.
And I asked him what I should ask you, since you guys go way, way, way back.
And
Here's the question.
This is from him.
Well, first of all, I mean, obviously he's a huge fan. Oh man, so many early memories. I miss working with him. But here's the question. Something I always wondered.
is that we all had cryptonomicon as required reading. So I want you to explain that. This is I love that book. Went to the financial crypto conference. Max wanted to use cryptography to make a new money system.
How close were we to really solving the same problem as the Bitcoin algorithm?
Or something along those lines. So maybe you could just provide
S backdrop here for people who have
Absolutely.
No contact to put this together.
So that was one of the weirder
dual track like am I in a dream? Is this a simulation?
experiences of my life. So
Full context of Luke and I
Work.
classmates, I think it was ahead of me by a year in school, but we were at University of Illinois together.
And
worked on a couple of failed startups together there. So we're we go way back and we're
Really close friends. And
As
We all made our way to Silicon Valley. I hung around campus because I actually really wanted to do the research in cryptography, which back then crypto meant cryptography, not cryptocurrency.
But I've always thought that there's
Interesting opportunities in currencies. Currency
Yeah.
Powered by cryptography. So I w I was obsessed with things like
No, David Chom's work.
And
Anonymizing signatures.
DigiCache was a thing, you know, back in prehistoric time.
And what's the in prehistoric times, like what year roughly? So I did it to U in nineteen ninety seven. DigiCash
Which was the granddaddy of all cryptocurrencies, I hope.
I'm not offending anyone's prior art, but I believe it was probably the very first attempt to make a real
Digital currency using cryptography. I believe it went bankrupt in the summer of ninety eight, the year I moved to Silicon Valley. I actually went to the
Pouring one out.
On the curb party held on
Kind of somewhat less explicably.
one of the picnic grounds at Stanford University. Happened to be there.
actually a really good lesson like sort of took that away with me to PayPal where there's a bunch of people people you know today, people who are very active in crypto, cryptocurrencies now, but also just like
Interesting famous people.
Famous today.
We're all very young back then. And the conversation was around this idea like how the world is not ready for this yet. Like the
Digital cash and digital currency, like people aren't ready. Ninety eight, you know, this is like
Ten years before uh the Bitcoin paper, so
I'm sure they were right. But the conversation was really around it's obviously the right thing to do, the right way to do it.
People just don't get it yet. And
As a sort of naive, freshly minted computer science graduate, I was like, Well, or the user interface sucks. Like it's really hard to
have this like very, very slow
R say
computation happening on your crappy laptop if you're trying to pay for a cup of coffee. It's just too slow. And people are like ah heathen like
You don't understand what you're talking about.
No time too long to wait for a digital signature.
Non repudiation. Like okay, great, but
Like seriously, you know.
I guess one cup of coffee. So I it was kind of an early moment like I feel like some of these things are not like the others. Anyway, and so I had
Literally within days of that event, I met Peter Thiel at Stanford. He was getting a lecturer. I was hanging around Stanford campus.
Luke was actually the connective tissue. He knew Peter and he went to school with me.
And so he was kind of like, Oh yeah, like you guys should know each other. This was great that you ran into one another. So the the origins of PayPal story were literally being made that summer.
And
I was still like, sure, I'm gonna start a company in Silicon Valley doing something I don't know what.
But I was still going to like scientific conferences. So there was this one conference called Financial Cryptography. It was held in Anguilla, which is a
Kind of a small island of
British West Indies.
And there's some all sorts of interesting characters. Probably deserve its own podcast one day, but it's a interesting, hilarious, bizarre story.
I'm ninety nine percent confident whoever Satoshi is
was probably going to the same conference at the same time as we were. But Luke and I were there and then another year Peter and I went there and
After PayPal was already a thing, I presented something basically saying, Hey, so we build this thing, it has a great user interface.
And I was there when DigiCache failed and like I think it failed because of user interface. And
This was now a couple of years into PayPal and we were definitely doing well and DigiCash was definitely dead and people were in the audience going like Boo, you totally don't get it. And like, okay, clearly maybe there's a reason why we're succeeding.
Anyway.
As we were doing all this stuff.
Neil Stevenson publishes the first
One hundred pages of crypto-making.

And so as we're coding and like I'm literally coding
twenty four seven steam comes out of my ears every day'cause like I don't eat, I don't sleep. The six of us are just in the office together and
Three of us are basically just typing code as quickly as we can, because we have this thing we have to build.
And
The only thing we take breaks for is we're trying to
Read.
Crypto How can
And like the more we read, the more we're like we think he's writing about us. The first few chapters of cryptonomic is like this development of digital currency using cryptography. And he's like literally talking about
I think he actually references digica and he's referencing like user interface sucks and somebody needs to build something more user friendly. So I'm like, Am I in a dream? Is this real? I remember sitting next to Russ, one of our earliest engineers, who I also went to college with was another Luke Nozeck friend. And I'm like,
If we didn't know any better.
This is all just like a big brain and a bad experiment. We just don't know whose brain it is. It's being described to us in a book as being published online.
And then we ran out of pages and like it wasn't published for a little while longer. Like how will we know what to build next? We don't have the book anymore. That that's like the extended cryptonomican story.
Wow. And for folks who have never heard of this book, it's an incredible read. I mean it's
In retrospect, I suppose quaint in some ways, but so prescient.
In so many other ways. Just phenomenal. I remember ripping through that book and like all Neil Stevenson books. It's like five thousand pages long. Um
Ha ha ha
Hay
It's a great book.
It's so good.
I
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I
My college life was shaped by snow crash was probably the thing that really put him on the map. And I read that there was like a dog eared version of it hanging around one of the offices that I sort of
hung out in college.
And it's like this is the most amazing thing ever.
This book sort of shapes my
At least.
Software engineering life and then
Khromadan was the next one. I was like
All I need to do is just like read more Neil Stevenson and he'll show me the way. There's some really long books after
Which sort of were
Quite challenging to get through.
But then we got to Ream D, which was another gift. So I'm reviewing my preferences here.
He's like the digital Nostradamus in the world of fiction. Totally. Snowcrash for people who also are not familiar.
is where the term I believe it's where the term metaverse was first coined is in that book. Exactly. And those Boston Dynamics. I think that's the company with the cute slash terrifying, possibly soon to be weaponized robotic dogs.
Go check out Snow Crash there in that book. Yeah. Snow Crash basically presented an alternative
Neuromancer was this
Dark dystopian. Also, by the way, first book I read when I came to the US.
Neuromancer? Yeah, yeah. So two things. So actually this is are we in a simulation? So I come to the US
July sixteenth, nineteen ninety one.
six weeks I think before Soviet Union fails. But I leave Soviet Union and I come into this like
Dreamland of America.
And then six weeks later, my passport is a passport that doesn't have a country anymore. And so I become a man with no state and et cetera, et cetera. Makes for interesting travel existence.
But
I'm like an ultra ultra nerd and I was like the king of the nerds.
In my prior life, and this is a summer, so I don't know
where I'm gonna find my people. But like
Six weeks go by, so a union fails and I start a public high school in Chicago.
And I'm sort of like casting around for my my people.
And I run into these guys who are still really good friends of mine and they're like, Oh, you're one of us
We have a word for this. You're a nerd. It's great. You like science fiction? Great, you love science fiction.
Have you read Neuromancer? Have you seen Akira?
Like no, hasn't made it to Soviet Union yet. This was it was not a difficult conversation to have.
But they're like okay, here's a VHS of Akira.
Here's a copy of New Ancer. Go home.
And like don't come back until you've been completely
Pilled with these things and I was like
One, these these are gonna be my friends for life, which turn out to be true. It's been
thirty odd years and we're still talking to each other every day.
And I like
The beginnings of
completely different science fiction consumption experience.
That said.
For the next few years I was like neuromancer and everything came after neuromancer.
Is the dark sort of
plug your brain in future.
And Snow Crash offers this like hilarious
Completely different.
Consumerist
satirical version of the plug your brain in.
versus this like dark corporations rule the world.
Ninjas in skin suits and
Like
Kill you while you're plugged into a deck.
Trying to hack your way into uh some corporations. Anyway, so I if you're like walking me down the memory lane.

Yeah.
Well there are a few.
Pieces of commentary. Uh number one, you gotta watch Peparico.
Like this is
It is
very adorable in its attempt manually to do
What we could do with
CGI and so on now, but it is
All the more impressive for what it is.
able to accomplish with hand drawn.
Cells. I mean it's it's just bananas. So it's worth checking out. Neuromancer also, I believe in
I'm not alone in this that
Sci fi is a great place to go looking for the future, but it's also a great place to go looking for philosophy.
So I wanted to share a couple of things from William Gibson.
And these are the kind of quotes that will stick with you. Like when the past is always with you, it may as well be the present. And if it is the present, it will be the future as well. Like noodle on that for a minute.
And I'm going to get this paraphrase wrong, but I'm gonna get it.
As they say in Silicon Valley sort of directionally correct, which is
The future is already here. It's just not evenly distributed.
Something along those lines.
In any case, I'm getting um off track. I want to
This is you probably weren't anticipating, nor was I, that this was gonna be
Like a roll call of fiction, but I want to come back.
Two
Something that you had in tribe of mentors and it's related to books. I asked you
What book or books you've given the most as a gift and why?
And one that I've still not read, I'm very embarrassed to say this.
Is the master and margarita.
Missing out.
Yeah, so this is now on my to-do list. I'm gonna let you fill in the blanks here, but you said I usually buy M, which even though literally five lines above it, it says the master of Margarita. I was like M and Ms and batches of five. But you give it as gifts to new friends. I do.
You always have copies on your desk at work in case someone wants to borrow one. Why? What makes this book so special? Who's the author? What's the background?
It's a great book.
It is well translated.
by a couple of different translator teams. So you can almost not go wrong buying
One of the last
Three translations. There's about six that I remember exist.
In English anyway.
I would not bother with the first
Three.
I think one is Pevar and Volkonsky is the kind of a the canonical, like great translation into English.
There's now a new one.
I'll remember in a second with my own O C D.
Exactly who this is, but
Yeah.
Pavier Volkonski's a fantastic
Very good translation. Uh anyway, it was written by
Mikhail Bulgakov, who is
Arguably the greatest Russian
Language writer of the
twentieth century, in my biased opinion. There's a lot of great Russian language writers, so it's a it's a bit of a
fish in a barrel type situation, like who's a great Russian author. And there's some fantastic science fiction Russian authors, incidentally, but
He
Wrote many books and
All of them are really good.
The premise for Master Margarita. So it's set in
kind of an early nineteen twenties Moscow. So
Soviet revolution happened, the Russian Civil War ended.
The place is now.
socialist and sort of
slipping into socialist bureaucracy building mode.
And yet
It's a socialist paradise in the making.
And so the devil.
Like the Prince of Darkness.
visits socialist Moscow in a summer of nineteen twenty five, let's say, with a coterie of
Characters.
From what
You would expect devil to hang out with.
Reeks absolute havoc on the socialist paradise.
So first of all, it's the book within a book, which which is like one of my favorite
Plot devices.
The main character, the uh
On his master.
He's a writer who wrote a book.
About the last days of Christ.
It's a book about crucifixion. A lot of it is in the book. It's interspersed with the chapters of the original.
And obviously Bolgaga wrote both, but he's very much referencing himself. So he was in Moscow during the revolution and on
And very quickly ran a foul of Stalin and
was also because he was such a prolific and brilliant author was Stalin's favorite author.
was persecuted, ultimately asked for permission to leave the country because he couldn't be himself, he couldn't write
Stalin apparently permitted it, but then he died before this could happen. It's a little autobiographical story of the writer himself. It's a story of
Devil.
Making a mockery of socialist paradise to story of Christ and his last days on earth.
Told by an amazing writer.
both the author of the book and the book's author, also known as the master.
It would take many hours and at some point I'd be like, you know, well, you should go read the book because it's so amazing. But it is one of the best
Portrayals certainly the earliest brilliant portrayal of Homo Semeticus. What happens to
The human mind
When exposed to
rampant socialism and
It is.
Funny as hell.
because having grown up there or spent six or sixteen years there.
The
insanity of
Living in a socialist paradise.
And yet
You don't have enough to eat.
It's tragic, obviously, but it's also very funny. The book does it.
Amazing justice.
And it's like super duper supernatural, sort of science fiction y in what's possible. There are flights, there are witches, there is a
Devil Sabbath.
There's all kinds of crazy shit that happens there. It's amazing. Something for everyone.
It's an amazing book.
And it's shorter than most Neil Stevenson books, is at least is my impression.
It's like a quarter length or fifth of a a a short Neil Stevenson product. So it's definitely very accessible.
It's also incidentally um
Not to over share.
It is the reason I am married to the woman I am.
Okay. I'm not gonna let that pass. Yeah, please expand.
We met completely randomly through like a a sheer accident and
Both were predisposed.
to be like who is this weird person? Why am I talking? to
Whoever this girl is, whoever this guy is.
And then
I thought she was quoting Master Margarita and it's like before I like
Found my way out of this conversation.
I've got to find out. It's my favorite book. It's always been my favorite book. Like how can I not so because I know the book as well as I do, because we're speaking in Russian, I quoted the next line.
And she's like, Oh my God, Master Margarita. That's my favorite book. Like, No, it's my favorite book.
And it's been
Twenty
Seven years and two children and and a very happy life together. Incredible. So this is this is a book that many things in my life are owed to. By the way.
To give credit where it's due.
She's the one who said, Oh my God, that is the best line I've ever heard in a movie.
Referencing uh whenever there's doubt, there's no doubt.
She so she actually she deserves full credit for this.
Full circle. Oh boy. Yeah. The brain in the vet question just keeps popping up. So let's actually talk about
Your wife for a second and your relationship for a second, because I was texting with another
Mutual connection, Sami Inkunen, who is also a
Absolute monster endurance fan.
And
Yeah.
Texting back and forth about that.
Chatting with him and I know you're an investor in Verta Health, which people should check out also.
Let me just pull it up here because he shot me over a couple of different
Options.
For questions, right? I asked him the same thing.
And
I'll give you a sampling and then I'll
Indicate the one that most caught my attention, right?
I asked him about what it's like to cycle with you and he said, Well, if you're gonna be riding with him, just know he pretty much goes all out always for the first ninety minutes, no matter who he's riding with, but enjoy. And I was like, I'm not gonna be riding with him, don't worry.
And then he had he had a number of questions, right? Grew up a super intense engineer, now a well rounded CEO leader. What did it take to go from one to the other?
Cycling, why did he go like fully all in a few years back, which is actually kind of an interesting question, because I know that's been part of your life really, really consistently on a near daily basis for much longer than a few years. But third, this is the one.
That caught my attention. He's essentially working with his wife on sci-fi, you know, his family office VC. What's his advice after years of experience?
Regarding working with a spouse.
So that's the one that I wanted to hit next.
But you gotta marry right.
Otherwise it's hard to work.
Well what's your what are your thoughts on Marrying Wright?
If you have thoughts on that.
I do, actually.
I've spent a lot of time
thinking. I mean I spent a lot of time thinking about all kinds of random stuff and uh this this is no exception.
The line Marry Up is a line.
people use all the time. And I think that's kind of a that's
Cute.
What it really mean and I agree with it. I just think it deserves unpacking.
I was asking myself actually a question, like why is our relationship as good as it isn't? It it is really good.
And is there anything to learn about
co founding companies. Like you you're co founding a family when you marry someone, you you you know, you you get together with someone and
Or the parallels and I was contemplating all this stuff. I sort of realized that I've had many co-founders over the years and some more amazing relationships and others.
It's always tempting to sort of blame yourself, but
you obviously have to examine it through the lines of like what fell apart as a relationship between two co-founders.
And I realized that that the secret for
My
Marriage.
I'm still trying to impress this girl.
Like every day I roll out of bed thinking like
Well, and like how did I get this? Like this is definitely better than I should have gotten. So clearly
I gotta work on this. Like I I I can't let her find out that
She married down.
And so the attempt to impress your mate on a daily basis.
Is the secret to the best marriage. And I think that the good ones are where both sides are kind of secretly thinking, I definitely lucked out. Like this is so much better than I should have gotten. And so if the feeling is mutual, you're gonna go very far together, just constantly trying to grow and
You know, come with new tricks, new ideas, new No, you don't let yourself be stale.
Because you're watching the person next to you grow and become
more well rounded, more intelligent, more successful, et cetera, et cetera. So that that's sort of the secret to our
relationship and everything I've accomplished in my life.
Since we've met.
Has been
Modulated.
By her. We keep on referring to this.
Her so her name is Nelly.
I think I suspect many of our mutual connecti refer to her as the sort of the actual reason behind anything that I've done successfully in my life.
It is true. She's been
Extraordinary uh
Both.
Calling my BS out when there are some
And
Pushing me.
At the
You know, things like
Whenever there's doubt, there's no doubt.
situation saying like hey
Trust your gut. Make a decision.
This isn't the right person, this isn't the right idea, et cetera, and so on.
One fun fact.
So we met
in the very early days of pay ball. So that that same sort of the summer of ninety eight is when
The seeds were underground for PayPal.
early ninety nine when we started.
My wife and I met in mid-99. So exactly a year after I moved to Silicon Valley.
And so she witnessed the entire PayPal saga from the front row seat.
after PayPal was like anything but financial services. I'm gonna go build some other stuff, but like I I can't allow my sophomore act to be the shadow of my freshman act.
And she'd sort of say, you know, like do whatever you want. Like obviously you have a right to come up with anything, but I'm just gonna tell you, man, like that's clearly what you're meant for. And so like, you know, you go on. So seven years later, after I've been meandering through a desert, she's like, you know, I think I said it before, but I just want you to know still true. Yeah. Maybe you should go do what you're good at.
Yeah.
And I affirm is very much a product of that conversation. I was like, I think she's right. I think I'm a one trick pony. And uh the trick good trick though. So here it is. Anyway, trying to impress your mate, trying to impress your co-founder every day because you can see the other person progressing in front of you.
And get better and smarter.
And more intimidating by way of just being so much sharper, so much more interesting than they were when you met is a great motivator. It makes you you know keeps you on your toes, makes you work harder at improving yourself.
And on top of that.
What have you learned about
working with a spouse or collaborating with the spouse, right? Because sometimes spouses can be often very well matched.
And have a dynamic
Like the dynamic you described.
But they have some compartmentalization or separation. And I've met so many friends and
Even have some neighbors where
They've just
quote unquote, attempt to retire.
sort of like a failed retirement. And then one never was describing this to me. His wife is also very active, has got tons of big projects she's working on. And
He doesn't know what to do with himself, so he'd like sit down at the
at the breakfast table while she's on her laptop and be like, So what are you up to today? And she was like
Took off her glasses very slowly and she said, You know?
I'm not used to checking in with you every morning.
You need to get a job. Right. So working together is a very different thing.
When you have that. And maybe I'm overstating.
The extent to which you guys sort of.
collaborate in that way. But any thoughts or recommendations for people who are
Entering that type of
relationship with the spouse.
It can definitely.
Get.
hairy, for lack of a better term, if you're not thoughtful about it. So you have to think through you have to talk through
Kind of what makes sense, what doesn't matter.
We're well matched.
because
I am quite technical.
have lots of interest in sort of the
Technical depths of matters that
We work on together.
She works on, I work on, et cetera. And
She has an extremely strong finance background.
and understands business models and kind of state philosopher of business these days.
And so our conversations are very rarely about checking each other's work, which is where I think you could really end up with like why are you uh
Checking my own.
Don't micromanage what I'm good at.
And it shows that she's an incredible empath.
And I'm not. Like I frequently be like so I'm I'm dealing with this in my my day job.
Why is this person not happy? Can you explain to me? And then and she's incredibly good at that. And so I think because we are such
kind of non overlapping areas of strength.
We end up
being very complimentary. If anything, we tend to be like Wait a second, like we're on your stuff.
Why are you bouncing to mine? Like we we need to finish that thread. Both of us have pretty active professional lives, and so we're constantly
Discussing them.
We
Don't
I think ever run into or step on each other's toes.
She doesn't ask me
What's your token budget? Any more than
I ask her, how did you make this hiring decision?
Or like how do you decide that this was a bad investment opportunity with all like I'm pretty sure she looked at it with the all the tools she's gotten, they're better than mine.
But you have to be
Prepare to communicate.
And
It does not hurt.
To be direct with one another, and so you have to be able to take on directness.
Without
Heart feelings and
A grade one liner, another gift from my wife. She didn't come up with it, but she had read it somewhere and she's like, Here's a new model for our family unit.
Don't go to bed angry. Stay up and fight.

You guys put that into practice? Uh we don't fight too often, but we definitely don't let
Curfe you uh
Prevent us from hashing out whatever it is our difference are of the moment.
We try very hard not to let things fester and
That works really well. If you're going to overlap
Familiarly and professionally, you
Better.
deal with conflict or disagreement quickly.
Because you're accruing areas of negative overlap.
Faster than most people do.
Like I I hate the movement two.
But I love you all the other way. It's like we gotta talk about that, but it's not an important thing. It's like I hate the way you chew. And by the way, you've belittle me by checking on my token budget. It's like compounding frustrations and marriages fail because people just don't say out loud, like here's a thing that I I'm not sure I'm uh I'm prepared to put up with.
Just gotta stay up and fight. Get it out of there.
They have been fine.
That'll be the title of this podcast. You mentioned earlier time is a zero sum game. I want to talk about
Obsession and
Analysis
And
tracking for a second because ultimately the question is
How do you choose?
What track?
This is pulling from a men's journal piece that came out in twenty eighteen. So some of it is dated, but today, if you can name it, Lev Chin has quantified it. Food he spent weeks using his iPhone to photograph all of his meals and snacks and later gauge to nutritional values. Sidebar from Tim, I did that too.
I still can't believe that say the Dexcom app
doesn't give you some estimate of chloric content or macros. It's just like you ate chicken. I'm like, that's not helpful. Anyway, coming back to sleep. As an overtaxed entrepreneur, as the parent of two children under the age of five Lev Chin determined his minimum rest threshold by shaving
Five minutes off of each successive night. Interpersonal relations and time management. Lev Shin says he wants to spend a month grading every business and personal meeting on a scale of one to ten on several metrics like usefulness, intellectual stimulation, and social stimulation. It goes on and on.

So I've done lots of this too. I'm just curious.
How you have
Over time.
determined what to track and maybe what you're paying attention to outside of
A firm business.
metrics and things internal to affirm, and we'll get to a firm.
But I'm just wondering for yourself.
Outside of that.
Company professional context.
How do you choose what to
Track.
I've definitely gotten a
much better
At
Deciding
what matters, what doesn't. So when this article was written, I'm sure
No metric looked dumb. No metric looked superfluous. I was like great.
Counting the number of
Times I trimmed my fingernails. Hmm, what is their signal in that?
As you age you replace
Raw.
Compute.
in willingness to engage in raw comput with pattern recognition and
occlude paths that you don't need to travel down because you know there's nothing there.
Like there's absolutely no value in tracking your fingernail clippings or rate they're off.
I've become more focused on tracking sleep.
because there's more and more science showing that that's really important.
Even that I sort of used to obsess over a bunch of metrics and I think at this point these sort of
reasonably cutting edge and you know.
Better than I do, I think these days.
Rusting heart rate and
Heart rate variability are the two really good anchors. If you keep one down, keep the other one up.
That predicts your recovery, predicts your
intellectual capacity for the day really well. So I track that pretty obsessively.
I try to
Stay in bed.
Right number of hours, I'm a lot less obsessed with I don't need to sleep more than X, so better be, you know, bullet out of bed by X plus one second.
I'm also not
precious about, you know what, I don't feel like I need any more sleep. I'm just gonna go and tool around and do more stuff. So I I've I've relaxed a bunch on things that I found to be less impactful to my own life, but I have the benefit of spending a bunch of years obsessing over everything and deciding, well, it doesn't seem to matter that much what I eat, for example. So for a long time I was obsessed with
The exact
sort of a caloric and macro.
Targets.
And then at some point I
have to travel a lot more than I used to. And obviously that goes out the window because you can't bring your favorite yogurt with you everywhere you go. And so you end up like well
I'm just gonna have to have some fermented foods.
From the assortment available in this geography. And it turns out that basically your gut health is like
Gonna be okay if so long as you're having enough fermented foods versus like the fermented food you've still got for yourself. So you relax some constraints and move on to uh
Spending less time thinking about them.
I track sleep. I'm still an obsessive cyclist, so I track every metric you can imagine. I become more obsessive as a cyclist. Actually bothers me a little bit, but because I'm unwilling to believe that I'm ever going to age.
Properly I keep on looking for marginal gains by like
Obsessing over
The exact
crank length adjustments I can put myself through just to
return some of you marginal.
What did I lose with age?
I've gone from
Believing that all you need is cycling to
Widening my
Physical.
training routine too. So it's uh maybe slightly more brain allocated to like what's the right
Day two.
Lift heavy weights versus the right day to not do that.
I
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I
I'm curious, and I've never asked you this before, but when cycling entered the picture because in doing some
Research for this conversation.
I can just pull this is from I believe an alumni magazine but behind the curtain of Soviet era Ukraine and then your full name, which I cannot pronounce, is born to a family of physicists. As a child, you struggle to overcome life threatening respiratory diseases.
And
Parents are told you won't live past childhood, and with your mother's urging, a determined young Max begins playing the clarinet to build lung capacity.
So I mean that doesn't seem to have the makings.
Of a serious cyclist.
When did you
Embrace
Cycling and what does it give you?
Also.
There's an interesting
origin story that actually kind of intertwines Ukraine and Clarnet and everything. So
I did have some.
fairly gnarly respiratory stuff when I was a kid. And
I think my parents probably
We're scared into kind of throwing everything in the kitchen sink into it.
A nice Jewish boy from Ukraine. I probably should have played the violin, but Klarnet is a a reasonable close second. They're like, Oh, but lung capacity, great, let's do that. So that that's how I got into Klarnet. There was like literally something that will feed the stereotype.
But also help with one capacity development. And so
I think my VO2 Max at the time must have been like in a single digit or something'cause like I remember just trying to open up my lungs and breathing and like it didn't work.
And then
Like everything else I do, she's like, Oh well, uh I can just like obsess and measuring it and
V two maxes.
Definitely not a thing Soviet Ukraine really measured, but they did have like the basic approximation like blow into a tube and see how far you can push the ball, like all the physics equivalents of lung capacity measurements. And so
I was already looking at quantify itself from one capacity perspective as like a seven year old kid or something. All of this while living in an apartment complex that overlooked
Kiev's only outdoor.
Villa Drone.
And so my platonic ideal of a manly man
who was like a sports
Phenom.
was these dudes who would like get on the boards of a Chia Velodrome and just
Could there be a
watts down and like go for an hour to just ripping through this thing. I was like wow, like one day when I'm not a scrawny little kid with a claret
I'm gonna be like that.
So I used to sneak into the Velodrome when it was closed and try to ride my bike there, except the cranks wouldn't touch the wood boards. Like one of the worst accidents of my childhood was I had a giant wood splinter in my butt because I crashed at the top of the Velodrome trying to do loops and slid down. Of course, these weren't well finished boards and it was outdoors. So like
the elements the rain on it. Probably not PG thirteen after this. But anyway, so I I always thought like cycling like I I didn't grow up with a ton of
sport in my life other than like soccer is prevalent obviously in eastern Europe.
But like cycling was right there on display every day.
If I wanted to see someone.
Who looked like just
full of life and vigor, I would see a cyclist. So I
Always rode a bike.
I was a kid and always rode a bike.
In college and sort of as I
got into sort of busier and busier.
where this notion of
Like how do you stay sane?

And important.
Part of the consideration, like if you're going to work
For three days straight without sleep. Like you gotta offset it somehow. You can't just like sleep it off. You also need to do something to your body versus your brain.
I sort of naturally looked at cycling and then
Back to Nelly.
When I left PayPal after we got acquired by eBay
I definitely hit like a very low point where there's nothing going on in my life.
That was worth staying up all night for.
And she pointed out that I have this amazing bike hanging on the wall that you know I've had since
before we met. She's like, why don't you like get back on a bike and see if you can find joy in that and then she knew my stories of rolling around the Kia Velledrome.
And so I got on the bike and it was one of these moments where
I went for a ride with a bunch of people and they were all like very serious road jewellery, as the saying goes.
I've never heard that. It's like if you're if you're if you're buying more of a bike than you deserve to ride, like that's the best road jewelry got there.
I I wasn't like an uh beater bike.
Relatively speaking, I think I brought up from college, actually.
And I sort of dropped everybody on the first hill.
And I was like, Oh yeah.
I know how to ride a bike. I have big lungs. That cornet really paid off.
And so that was like
I should like really invest some time into getting better at this thing. That's how I got into but I I am
Exactly what they uh call a hammerhead. So you know, if I see a road
I can't not go fast, or at least try to go fast.
What does it give you in terms of
Dividends.
Just on an ongoing basis.
Couple of different things. So it's definitely I mean, it's a low impact sport. So you can ride a bike for six hours and no part of your body will be like in absolute shreds.
the day after if you s at least somewhat know what you're doing. So it's it's a great just
If you have the time and if you're interested in it, it's not a self destructive sport, which some sports are more and others are less. This is definitely one of the less self-destructive.
On the actual physiology.
Part of why I like to go hard on the bike is it actually allows me at least to clear my head. It's one of the few times when I'm not constantly
playing with some work related concept or thinking through some future ideas or you know, whatever it's a moment where
Sort of everything gets.
tuned out and it's just me and the
pain in the legs and sort of you're you're telling yourself go harder or manage your energy, but there's not enough time or cycles left and like
Also, what if we went to this market now? It's a moment to go into like a pure
Moment of yeah, flushing the
Whatever's left in the head. And it does keep you healthy. It's a great way to stay alive and be healthy.
And then
More and more these days, it is a lifestyle sport of CEOs and leaders and people who sort of read the same kind of books. And it's another form of a community where if you don't have the time to sort of
Join.
Clubs and
I'm not a big
Foodie, I'm not a big
Drinker I'm not sorry, I don't have a ton of time for these
Protrac social events. I try not to go to too many conferences.
And yet
I'm human, I enjoy human company. And so writing
Pack of
People who are
Interested in similar things is another form of
Staying engaged. So I imagine that's a being near people, not a talking with people type of situation, if you're going as hard as I suspect you're going, right? Part of the trick is if you can still talk and they cannot.
Then you're doing it right.
Cycling.
takes place over hours. And so you can spend some time talking. There's also
An important part of cycling culture is the coffee shop ride where you sort of you hammer to a coffee shop and then you sort of everybody falls in their chairs and gets their pinkies out and sips espresso. And uh that I I I love coffee almost as much as I like bikes. So it's uh
Another part of it.
If we have time, we'll come back to coffee because I did dig into that in the research. Two other quotes that you gave for your potential billboard answers, you said if it were in Marin County. And I'm gonna mispronounce this, so you can correct me, but it's either Jen's or Yen's void. I'm not sure, but you can correct me in a second. So two quotes from him, Legendary Cyclist.
Number one, when my legs hurt, I say, Shut up legs, do what I tell you to do. That's the first. The second is if it hurts me, it must hurt the other ones twice as much. That's a great one. It's so applicable in so many contexts. Am I saying that name correctly? Probably not. I think it's
Yens.
I think it he's East German, Jens Vogt.
One of my proudest moves on a bike is I rode with Jens.
Few years ago now.
He used to hang around Northern California. He's a lot of fans, actually. He's transcended the very specific sport of cycling into having a fan base.
Worldwide because he's such a character.
The shut up legs, like I own multiple
piece of clothing with shut up legs that I did not personally produce.
He's famous for that line, but he's a very funny
He's now primarily a commentator in bike races.
But he is a great embodiment of
This culture of endurance.
Pain with a smile, if you will.
Pain with a smile. Before we move on,'cause I do want to ask you a bunch about a firm and broadly how things you've done with a firm reflect
your thinking and ability to see things that others don't see, perhaps. But before we get there, I wanted to come back to M M.
Yeah.
This book we were discussing earlier, and for people who are like, Oh yeah, I meant to write that down, The Master and Margarita.
You wrote here just to reiterate some of what you already said.
It's a fairly short novel, remarkable in its exceptional depth, exploring everything from fundamentals of Christian philosophy to the fantastical and hilarious satire of soul corrupting twentieth century Soviet socialism. So my God, that's really well put. Yeah. I don't think I'm alone in watching some of what's happening in the US.
And elsewhere with respect
To
This embrace
Of
Socialism or things that go by the name socialism.
Perhaps you could apply other labels.
And while
Capitalism is not a panacea for all things, and there are plenty of warts and risks and
You know, humans respond to incentives. As someone who came here at
Fifteen or sixteen.
I would just love to hear you.
Speak for a few minutes on
what you're seeing and what your thoughts are.
I'm pretty worried.
Not to sort of go all dark immediately, but
I think
People without the questionable benefit of growing up.
In
The collectivist paradise to quote.

don't understand just how corrupting it is. The ideas of socialism
are amazing. This you know, me for my fellow men and share and share alike and
Do the right thing because it's the right thing to do, not because there's a financial incentive to do it. All those things sound amazing. And so it it's seductive. The idea of
І worкер'спарайс.
Without the
Greedy
Lenders, capitalists, bankers, sort of all all the sort of things we were fed as children, or I was fed as a child in Soviet Union.
At first blush, you're like, Yeah, it makes sense. People who work hard should have more, and people who
Or
great even though they're not capable of producing valuable things in society because they're good people should have everything that I have, even though I'm working harder than they are. Those
Things.
Sound pretty good.
Inevitably require
А банч структур чин.
That just does not work.
Thanks to human nature and many obvious things.
Like it.
For example,
One of the greatest.
mental images I have from growing up in Soviet Union.
is if you went to a government owned store, and every store was of course owned by the government, you would very quickly notice that
The people whose job was to sell you things from behind the counter were always very fat.
While everyone you knew in your life was always very skinny.
And you sort of
This doesn't make any sense. Like how do these people who happen to work in food stores
Are always really
Well fed.
Like, well, because they're stealing. They get access to the food and it
Expands that notion of, you know, th this idea of everybody just
pools all the work product into one big pool, and then someone's in charge of fairly distributing it to everyone who needs it. That that's the you know from each according to their abilities.
To each
according to their need is kind of the socialist slash communist motto.
And it works great. Except people who are doing the actual redistribution get to keep a lot for themselves. And doesn't matter how
Honestly begin that journey.
By the time they get to real power, they become profoundly corrupt and steal and keep and
redistribute primarily to themselves. And so
That alone is just like an indictment of socialism that you cannot
Yeah, but it gets worse because
Markets
Capitalism, you know whatever.
term you want to use.
Inherently
Forces competition.
If you believe you have a thing that you can sell at a lower price than the other guy
You get the market's attention, you get the business that's available to you because the thing
Is
worth buying by someone.
You're going to work on
creating a margin for yourself by lowering the cost of production, finding efficiencies, finding some ways of making the thing cheaper for you and or cheaper for the buyer so you can compete on price. So all those things
Do not exist in socialism because it's all centrally planned. We're going to make this many widgets.
And then we're going to have someone redistribute them to all the right people.
Full stop. And what happens is there's never
the pressure to improve. And so
You always make stuff at the government mandated cost and the government mandated
Price is
What's being used to sell it and so you have natural stagnation. You have a system that rewards
Draft?
gives power to people who are most likely to become
Graft driven?
And prevents anyone else, talented or otherwise, from trying to innovate and improve the efficiency of the system itself. And so it it it just does not work. And the thing that worries me in the US.
And the world this this is a unique.

Is the headlines that make you feel like wow, I would love to live in the world where everyone is fed and everyone gets more or less the baseline of good living.
is very compelling. Like it it is easy to agree with.
The recipe for that.
remains to be the best recipe we know, the best recipe we've discovered as humanity.
Is capitalism a force for
Constant.
create a destruction where you build the next thing better than the other guy. And yes, his business may be put out because your business thrives.
But the beneficiary is the buyer or the
user of the product, the buyer of the widget, because you're constantly working to make the whole thing more efficient.
If you eliminate the ability to or you eliminate the need
To create efficiencies, you just stagnate and look the death of Soviet Union was surprised to exactly zero people because we knew.
Ask people who live there.
More than most.
That nothing ever changed for the better.
Everything was the same price, the government mandated a price. And
You know, we were still using phones that looked like they were made in nineteen fifties and moved to the office, like, Oh, you have buttons on your phones? That's amazing. We still do
The click of the rotary.
Yeah. And so anyway, I can't say enough how the seductive
story of socialism really appeals and I can understand why.
But
If I didn't have my day job, I'd spent a lot of time.
Screaming from every street corner, don't fall for the trap. It's a surefire way of getting to no progress at all.
So
Affirmation.
Is a
I don't want to say response, but it's a solution that replaces potentially predatory practices. And we're gonna get to that. But
I'm wondering.
How you would explain the current
Apparent wellspring of
Attraction to
Just to keep it simple, socialism in the United States. Are there structural or systemic problems that have contributed to that? Is it mostly sort of demagogues?
Using whatever talking points they think.
They can
Leverage.
To attract.
Votes, etc.
What are the ingredients in the cocktail that are contributing to this?
current phenomenon in your mind.
I'm confident I don't
No.
every strand of this particular disease. It's a complicated issue and
I think
It is definitely the case that the brochure looks great.
The storytelling of
Do you know someone who's poor? Do you know someone who deserves better? Do you know someone who's been
Laid off.
It's
The case that
Capitalism can be profoundly unfair, at least to an individual, as a system, as a way of
Improving the world.
It works amazingly well. We've not created anything better.
But
You get thrown off the bus if you
Build something that gets outmoded.
Or
out competed by another participant in the market.
And it can hurt for the entrepreneur, it looks like failure, which we are wired to accept, but it still hurts.
For a worker, it looks like being laid off, which could be catastrophic for a family.
For

misinvested their money or something went wrong, it doesn't look, doesn't taste good. And so the idea of social safety net, the idea of welfare,
is natural. Like you hate seeing your fellow
Men and women starve or not do well.
The definition of the problem and the notion of income inequality and like all the things that we see in Silicon Valley.
First hand.
It's very real. It's not like how are you complaining? Like there are a lot of people who are not doing well and every new disruptive change from
the industrial revolution to the AI revolution, there's always someone on the receiving end of the efficiency because their work is no longer required or their products or their ideas are no longer relevant.
And so
Socialism is a compelling story of how to protect those people, how to
prevent them from suddenly being on the uh outskirts of society or worse.
And I think
There's
Definitely a lot to do.
to make sure we don't leave our fellow humans behind.
Certainly my love of capitalism and free market.
Does not
Obviate my humanity. I care about people just because I am also human.
And I see it as part of my job to ask the question, can we do better? Can we provide the social safety net for everyone? We're creating more and more efficiency, we're creating more and more value. There have to be ways of helping people who are thrown off the bus to make sure they don't end up
In a gutter.
And
I happen to have
Some solutions that I love and solutions that
I think are worthless.
The idea of let's concentrate it all in the hands of the government, give a handful of people the right to redistribute it all.
And we'll do better doesn't work and I lived to tell the tale.
I do think that things like philanthropy is profoundly important and the more disruption we're going through as society, the more important philanthropy becomes. And I think in that sense.
Not an especially
outwardly religious, but I think
Religion.
provides a really useful set of frameworks around how to think about it. Every organized religion has a version of what it means to be philanthropic and
The older I get, the more I start.
Respecting
the thought that's sort of been aggregated over the thousands of years that most religions existed.
So I think that's
Super interesting and important and
Worth.
Participating in
And the other side of it is I think
Capitalism in particular.
has create opportunities for products to develop.
Where
These are
Optimizing up and to the right of the
Most profit at lowest cost.
ends up building products that are actually devolved from
not just their economic platonic ideal, but societal ideal.
And I don't think we have to compromise.
by saying well you know what I don't actually care that this is harmful to someone
because it's the most profitable market efficient thing to do. And my theory for a long time has been that you can build products, certainly financial services.
That
Are optimal not just from the lens of most profitable.
But also most societally beneficial.
And that's not
Uniformly distributed. There are plenty of products.
that look like mandatory lending and all the other things. Or just make money because the
underlying customer doesn't understand what's going on, doesn't have the uh capacity to deal with the complexity of the math involved.
And
A firm is the answer to that question.
In some ways what we are doing here is trying to say, look
You can optimize a product.
Beyond
Just making the most money. In fact, it's okay to make a little bit less money.
If you are able to create something that's societally more
Successful more important.
Because in the long term, I think you will have retention
That
Consumers will not go to a cheaper product or a product that
Is
less profitable for its shareholders because it's so societally important. So I am
To at least some extent embracing the ideas of
Pro social.
Product and engineering.
I just choose to do it strictly through the lens of capitalism.
I'd like to go to early early.
Affirm.
This is parallel to PayPal, which
looking back at say early fundraising for PayPal, it wasn't exactly like
Every door at Sandhill Road was opened with a red carpet.
I mean, it was incredibly hard going. People were like, Yeah, no way.
Possible, not gonna work. I mean, I've had conversations with Reed Hoffman about this. Just like yeah, no, like at every turn.
No chance.
And I mean ultimately with Peter pulling from the hedge fund and stuff, I mean it's a hilarious story and incredible. A firm
Early on.
Similarly, it was not obvious. A lot of folks would be of the opinion credit cards just fine, late fees too profitable.
And
What I'm wondering this applies elsewhere to your investing and involvement with companies like Yelp and so on.
What?
Are you seeing what gives you confidence? And of course there's a bit of a in the phrasing of the question a survivorship bias. So
Putting that aside for the moment, but
What gave you we could use a firm as the example, but like what gave you the confidence to keep
Driving what did you see that other people didn't see, or what were assumptions you made
Or hypotheses
that you felt just were worth
continuing to hammer on and test because you had some degree of confidence.
And what does a firm do? Maybe you should explain that first. Well, there's this acronym BNPL by now pay later that we kind of invented the genre about fifteen years ago.
And the basic idea is
At the point of sale.
Most of us pull out a debit card or a credit card.
And those who pull out a debit card.
generally speaking, think themselves financially responsible and think, you know, if I can't afford it, I'm not gonna pay for it. So like if don't have enough in my bank account.

Buy something cheaper.
The minority of us who are
For all the purposes are independently wealthy, you just say, I'm gonna put it on my credit card because it's easy, and then I'm gonna pay it off at the end of the month and I'll get some free float on that, but I'm not gonna pay interest to pay over time.
So huge percentage of Americans that pull out their credit card and say, I'm gonna add it to the giant pile of revolving debt that I already have and I'm gonna pay interest on it. And I don't really know how to calculate that and I have no idea when I'm gonna be out of debt, but I need that thing and
I'm not disciplined enough to pay for it with cash, right? I just don't have the cash and I need the thing. And sometimes the thing is like, Well, I need a new bicycle, which we can maybe postpone. And sometimes the thing is like I need a
Prime to put my baby in and
Yeah, I'm just gonna have to buy it one way or the other.
And so
The idea of a firm was and is and it's worked amazingly.
Fifteen years in.
But what if there's a third way where what if you could have the same transparency and
responsibility and clarity.
of a financial decision making with a pay over time
Product.
that you do have with a debit card. So what if we added
B.
Ідея в I want to pay for this over time.
But I don't want it to revolve and I definitely don't want to be confused as to when I'll be out of debt.
essentially turning every transaction into a simple plan.
Pay for
my baby pra m for
Over six months.
Let's say
Honey dollars at a time, doesn't break the bank.
Exactly six months out.
I'm done.
That's it. I'm not revolving. I'm not paying any more interest or or anything like that. And as we sort of describe the idea.
So I thought, Well, like if you're gonna do it right.
How about you build it so that
There is no revolving possible.
There's a fixed schedule only.
that every transaction is pre-price. If you're paying interest, you know exactly how many dollars of interest you'll ever pay. If you take longer, that can't change. That shouldn't change. And if you're late
There shouldn't be any late fees. Like you should just be
motivated to pay us on time because
If you take too long and you're late all the time, maybe we won't

Too simple, too black and white a way to lend money as an alternative to credit cards, which is a very long way of answering the question.
But
It is available now.
three quarters of all e commerce check outs in the US and Canada and uh rapidly expanding into UK. And we've announced we're gonna go to a bunch of European countries and there's not plenty of competitors that do the same thing. But we were
Kind of the first, I think.
So obviously.
Logical and
spiritual predecessors to this idea, but we sort of purified it down to no fees, no revolving, simple schedule.
Everything is pre priced, everything is super transparent.
And uh this year we'll do almost fifty billion dollars of these transactions. So it it's definitely it's worked out. Seems to be working. It seems to be working. We're probably gonna trade it. It's quite profitable, have been profitable for a bunch of time the last
Ten quarters we grew thirty.
plus percent year over year.
So it's like it's both.
Very big, growing really well.
Still never charged a penny of late fees, never charged a penny of revolving interest. So we're still true to the idealistic nature. And so as I was describing a product, I talked to a bunch of
banking people who laughed at me and be like, okay, dude, you don't get it. You've obviously never lent money for a living. Late fees is where the profit is. Half the profit comes from late fees. So like you just cut your profitability opportunity by half.
So putting that aside
You don't revolve.
What are you gonna do when people take too long to pay you back? You want them to take forever. You want them to make minimum payments, so the principle
keeps being big and then interest will compound into principle be amazing. Like
Yeah, all that sounds crappy. Like none of this sounds transparent. None of this makes any sense. And people in Silicon Valley who, generally speaking, don't need these services, kind of don't get just how
significant the cost is on your regular consumer that doesn't have a seven digit
salary, et cetera. So
I was sort of trying to uh raise money for this idea.
I would talk to the you know, VCs and they're like
I don't know. Why can't they use their platinum amecs? Like'cause they don't have a platinum ammo. Like why why don't they get a platinum? I mean I'm I'm exaggerating, but only slightly. Right, right.
Anyway, so so that was kind of the the difficulty raising money for this financial services company, unlike PayPal, was
Like
Couldn't convince anybody this was a
A thing that normal people would use.
How did you land on this, though?
Like how did you even get to the point where you're like, This is the deck I'm going out with and this is what I'm pitching?
The earliest version of this thing is actually pretty funny. Abridged since it's a colorful story. And actually Luke is involved.
Weird Luke meets another. I like color. I th I like colorful stories. We're not in a too much of a rush. Yeah.
Take your time.
Right after PayPal went public, Luke and I
I mean Luke is a wild and crazy guy. You've met him. I think he talked me. I'm gonna go with he talks me into.
But I'm already dating Nelly and I'm trying to impress Nelly. I'm I'm still trying to impress Nelly every day. But I decide the way to impress Nelly is to get a really cool convertible.
And so Luke and I
Find this convertible. Mercedes just launched their first hardtop convertible. So we fly to LA with a view to buy
B.
two identical we can't have the same color, so we need to like pick it. So we get to LA, we go to the dealership, like we want to buy this cool hardtop convertible from Mercedes, like a mechanical folding hardtop. So it's like a thing that like transformer car becomes a a convertible if you press a button. Super cool. So we get there and they're like, okay, Mr. Nosick.
Here's your auto loan. Here are your keys, Mr. Lefchin. Your credit sucks, so we're not gonna sell you a car today.
Like wait a second, like we like literally just took PayPal public.
I'm okay. I've paid off my student loans and everything. Yeah, but your credit score is really, really bad. So if you want to buy a car today, you're gonna have to wire the total amount of money.
Which is like my future wife then girlfriend is like
Ooh, okay, uh you didn't tell me that part of your biography. When we just heard uh
Getting to know each other. What did you do? Like I started this company in college with Luke No Sick, who's in the room. And uh he knew and I didn't that if you don't pay your credit card bills on time, it'll come and you know show up on your permanent record. So
I had to, in fact, wire money. And like as this dealership was wrapping up on the day they're like, Oh yeah, we finally got your wire. Okay, here's your keys. So we drove
From
LA to San Francisco on five.
Basically erasing each other at some
ungodly speeds and got pulled over at two o'clock in the morning and the cops were very upset with us, but actually let us go because they were similarly fascinated by these cool new cars. So we didn't we didn't actually get into a lot of trouble, but got into a minor amount of trouble for going way too fast at two o'clock in the morning.
But
The story stuck with me because
I was
Fine financially, better than fine. I I was
Mid twenties and just
Never needed to work a day in my life.
And yet the
car dealer who knew who I was, like he looked us up, was like, Oh yeah, I know you guys, you're PayPal kids, cool.
Yeah, you can buy a car. Sorry, your credit's stock.
Yeah.
And like, why does my credit report or my credit score not reflect the fact that I'm basically independently wealthy now?
And that really stuck with me. And so
I had a version of this conversation including the and then Luke Nosek had a sweater wrapped around his head because
It was really cold.
On five. Cops were really worried about him.

Anyway, and so uh the story comes up or came up over and over and over again.
And something like I should do something about this. Like there's got to be a credit score.
to be built around like
came to the US as a teenager with no record of any kind and six hundred dollars for a family of five.
And now
Independently wealthy Silicon Valley entrepreneur. Like it was like a five or seven year window between those two events. So it's it's not weird, but it's super weird. It's seven years like hello, I got a computer science degree, I was h imminently employable, I started a bunch of companies, not all of them failed. And like why did they not catch up to me at all? In fact it
seems to have had no bearing on my ability to borrow a fairly modest amount of money relative to, you know, everything else.
That's been like sloshing around my head for years and I finally sat down with
Another Luke Gnosic friend from U of I'm like what if we built a better credit score?
And so we're like Yeah, it wouldn't be too hard. So like
All of us are CS majors, we're all have some number theory background, therefore machine learning, therefore AI.
And so we built a score and it was like just use some publicly available data, a little bit sort of some other secret sauce. We built a score.
Oh well now we should like make people.
Lend money using our score because it's cool.
And so I talked to some bankers, which is how I began the sort of like
You're doing wrong kid conversations. And like, yeah, no one's gonna lend money using a score that no one else is lending money against. Like, what if it's a bad score? What if it doesn't work? And so
If you tell an entrepreneur over and over again this thing will never work unless someone does X.
The natural response is, Well, I will do X and see if it works. And so like All right, I guess we're gonna lend money.
And so like I'm just gonna go and get into a lending business. At which point
I was like oh
I gotta understand how this stuff works. I've never actually looked at lending very carefully. And that began the journey of like, okay, so how do credit cards really work? How did I manage to mess up my credit at the ripe age of eighteen in like by missing three payments? How did that happen?
And so
A year later of like oh my God, this whole thing is so broken and no one even knows it. Revolving
On
A thousand dollar
Draw.
And finding yourself with a three thousand dollar debt a couple of years later and he can't explain it.
Or getting a zero percent loan.
But not realizing that if you're a dollar short or a minute late
It will compound retroactively from the time it was written to you. So there are all these things that the industry built over the years that are just profoundly anti customer.
It's one of the only industries in the world actually like a great way of thinking about it. I think I heard someone else explain this to me this way, but
It's the industry where
You and your service provider face
Each other.
And
You're like, hey, I wanna borrow some money, but it's like great, I'm gonna bet on you failing.
I'm gonna give you a loan, but I want to believe that you're you're not gonna fail completely.
But you're gonna be really late.
Ideal you take forever to pay the loan back,'cause I make more money that way.
Optimally, we sneak in a few things you don't notice.
And it's all in a fine print, but I hope you don't read it. It is a very, very strange.
Vestigal
Capitalism is supposed to get to efficiency. This got us into a bad part of the decision tree. Like, what if I took a bunch of steps back?
into the branching point where you could have done
the more consumer friendly thing and just did that over and over and over again. What product would I end up with? Like oh
I ended up with a firm.
That's how we got here.
And what was your
Confidence in
Market adoption.
So going out.
You're pitching.
A firm for fundraising.
And I mean, there's so many questions I could ask. You're at a point where you could probably self fund for
A while?
But
What were some of your assumptions correct or otherwise that underpinned
turning it into a business. So you have identified
Perverse incentives and
Predatory fine print and so on. So there's a problem.
But then there are the bankers who are saying, Hey, look
Right, this will never work. But you're like, Well, if I have to do X and get into the lending business, I'll get into the lending business. So maybe that answers the fundraising question, actually. But
How did you have confidence that there was
Oh there, there.
From a business perspective.
I would pitch this idea in its various forms. So first of all, I did have to fund for a while on my own.
Which I didn't mind doing'cause I was getting completely obsessed with the idea. So as such things go, those that was a small price to pay, relatively speaking.
But I would
Keep on telling the story to somebody who was like
a CEO or former CEO of a bank or somebody who managed a credit card portfolio and they'll be like, Okay, you're doing it wrong, all the money's in the late fees, the money's in delinquency is just like
Come on. I had two ideas.
That both turn out to be.
Amazingly right. By the way, every business is like there's like a moment of luck where people think, Yeah, I don't really want to admit to it.

And there were ideas that I'll claim some ownership over, but I had no idea if I was right.
Yeah.
And
The first one I read the study.
that said that millennials hate banks.
Like it didn't really explain why.
It's just like millennials hate banks, like they hate a lot of things. Like millennials and every generation had a list of things they want to complain about.
These complaining millennials. I'm not a millennial, I'm a
I guess young Gen Xer.
But millennials were definitely like, oh, they're such whiny people.
But they
were willing to participate in some study where they ranked all the things they hate. And the number one thing they hate it, like seventy percent of millennials, according to that study, hated banks.
So every time I would ask a banker why can't this exist? Why can't there be a lending product that doesn't take advantage of people's unwillingness to read fine print and do exponential math?
They're like
Because banking is like the stickiest thing in the world. You bank where you live, and like, yeah, you you kinda like your bank. It's where your parents banked, like you go to the Marble Hall and the vault, and you like it. It's likable. I'm reading a study here that says that they hate you. Like all the people that are gonna be shopping and buying stuff.
Ten years from now, five years from now, they hate you. Seventy eight percent of them think banks are terrible. They should go kill themselves.
None of these people were like
I don't know. I can't believe that study. Like okay, I mean they surveyed like ten thousand people. Like that's a pretty stat cig
Study. So I if I'm right and I do a thing that's like even slightly better than the existing thing.
I have a ready-made audience of people that are gonna be like, cool, I hate the other one anyway. At some point, like I need to I need an explanation beyond.
The hate it. And so
What I realized, and I think this is the part that was lucky because I didn't know any better in the beginning, but I've since sort of confirmed this to be true.
Millennials were
Early teens.
During the great financial crisis.
And so if you are getting booted out of your house in oh eight and you're like an impressionable youth and you're asking your parents like what's going on and why do we have to live in a motel now? Parents are like, Because the bank they just took the money, they took my house away.
The embarrassment and the the horror of telling your kids we're gonna move to a smaller house or to a rental or to like we're gonna live on the streets, God forbid. That's a horrible impression to have in your most impressionable years. And so
I think there's a lot of people who are like actually quite genuine in the I am willing to try anything but the thing that my parents got the the sharpened the stick for. And so that was kind of luck number one. And I I really believe that.
From the very beginning and it turned out to be true.
Like if we build something that's normally have to market it, you have to convince people to trust you and all that stuff. Like I think they don't need any of that. They just need
the belief that there's a better thing out there that exists, and they'll give it a try because they are predisposed to not liking the other part. And that turned out to be completely true.
The other part.
If you are unwilling to profit from all the sort of
wacky externalities of financial services.
You better be good at underwriting. So if you're lending money to someone
You are
Having over
Underwriting mistakes or lack of underwriting or poor credit score.
When somebody shows up and says
I'd like to borrow a hundred dollars and you want to respond to them in real time, you have some giant machine learning model.
Or a small machine learning model.
Decide yes or no.
And what that practically means is it has to take whatever available data that person is willing to share, be it public or private data.
Run it through.
Some form of classifier.
Or
These days all kinds of interesting architectural.
So ideas exist in underwriting and say yes or no, but yes or no is actually not enough. What you really want is a price of risk. So it's some
For simplicity, expected value, expected loss.
If I give you money
Today
What are the odds? What's the expected value of you bringing it back to me with the appropriate amount of interest if that's what the price of the transaction is? And so underwriting is discipline of doing that.
at scale, in our case, completely in real time.
That's the score we built, the underwriting score, the credit score was that.
And the theory that I had was
Credit scoring is hard.
And you would have to have the absolute best people working on it.
And yet most of the time when you encounter people working on underwriting or credit scoring, they're not as impressive as people I'd met in my wondering of Silicon Valley up until that point. And like, why is that? It's an interesting problem. It's quite mathematical.
There's some very smart mathematically inclined people I know.
And the best I could
get to was it's embarrassing to talk about that you're working on loan.
And credit underwriting stuff at cocktail parties. Like when somebody asks you, What do you do? You're a math genius. You went to school for applied math or computer science. What do you do?
Like one answer is well I went to Wall Street and I build
Real time trading models. Like that's kinda cool. Like maybe it's like not societally important, but you're doing something interesting. And there's all the other answers. I worked for the NSA and I break codes. Like that's cool. That's what I wanted to do when I was in college.
If you're like I make lots of loans and I make sure that they're underwritten well.
And by the way, I make most of my profits by charging people lead fees and sneaking in nasty terms. So like there's gotta be a latent pocket of talent of people who would absolutely work on underwriting because it's it's a really hard and really interesting problem.
But they won't join the industry until someone shows up and says, I'm gonna strip it of all the gunk. I'm gonna make it completely transparent. I'm gonna be super pro consumer. I'm gonna take a lot of pride in the brand that we have, which stands for transparency and honesty and all the good things you can do if you would just sort of take a broom to the whole thing.
And so as I sort of formulated the product, like I'm going to get my unfair share of really brilliant mathematicians.
Because it's
Kind of a
So hollowing.
thing to do to squeeze pennies out of the market. They'd rather come to work for me
And build underwriting models with me trying to help people in normal America borrow money and not feel screwed or not get screwed. And that was totally exactly right. Like we have people who've been here for ten, eleven, twelve years doing that job who are like still
I'm so proud of what I do. I'm a mathematician and I'm putting my
Bing
brain to work on making honest financial products. So those two things were like
They're good ideas, but they're also
A lot of luck.
Those quarter
On quarter growth rates that you were mentioning are
Kinda nuts.
Seems really remarkable.
And I'm I'm wondering.
looking uh through your scrying ball into the future.

What do you think e commerce looks like? This could be as it relates to a firm, it could be more broadly speaking.
Yeah.
Two to three years.
Who knows, right? Let's just pick that as an arbitrary timeline.
And does agency commerce, if that's actually going to be something that takes hold quickly, if you think?
really affect a firm or do people state preferences in advance? So that not really. It's just maybe the the way that people purchase things change, but honestly for you structurally things don't really change. I mean, how do you think about the future of e commerce?
First of all, the reason the growth rates are
Compounding that.
Almost fifty billion dollar mark.
Thirty plus percent year over year, quarter after quarter after quarter.
is pretty awesome. It is a staggeringly good growth rate.
It is made better.
By way of noticing that are credit related losses.
Are super consistent.
It's easy to grow the top line, you know, I've lent more money this quarter than I did last quarter. Great. But will it all come back? It's a really important question. And the way you measure the success of these underwriting models is you ask the question, okay, so you made a bunch of loans last quarter, last year.
Average.
half life of our loan is like five months. So
You know, five months back you get a pretty good picture of like how good are you.
relative to today's macroeconomic reality. And if you look at our
Lost numbers or delinquency numbers, whatever metric you want to choose, they're really, really consistent. So we we are in fact very good at underwriting.
And
Yet, even at fifty eight billion, we are
But a footnote. So the overall credit card debt in the US last I looked was like one point three trillion.
So we're like scratching.
At
The total size of just a credit card debt.
Not all credit card transactions become debt and there's plenty of debit card transactions and and and so the overall size of commerce is
enormous relative to
where we are.
Our growth.
is not a surprise in a sense that
What may have been a surprise at some point was people actually like this product.
There are reasons to believe or reasons to say that this product is harder to use. So
Credit cards.
In debit cards for that matter.
Is the single best financial
interface ever created. If you think of the level of complexity that takes place when you take out your card and tap a
check out counter and just walk off with your cup of coffee. There's a lot of stuff that happens underneath. There's an acquiring bank, there's an issuing bank, they're talking to a through a network, there's all kinds of complexity just at a technical level, and then there's credit and blah, blah, blah. There's like layers and layers and layers of many decades worth of innovation that make
An incredible
single transaction happen in like
A tap and and off you go.
And so
When you introduce buy now pay later, which is this idea, every transaction is separate. You're conscious of every transaction, you understand how long it's gonna take.
to pay this transaction off, you're actually creating friction. You're giving people
More steps. So one counterargument to why this thing makes any sense at all. Like
Why would you want to trade the beauty of Cap and Go?
with us like open your app and do some stuff and
The answer is simple. The industry devolved and you don't really trust what's gonna happen to you after you tap. So you hesitate and you're like, uh, am I gonna really be able to afford it or is my card gonna work? Am I gonna get declined or am I gonna go into debt that I probably shouldn't go into?
A firm offers the antidote of you go into the app, you look at your purchasing power, you know exactly what we are comfortable lending to you, you get.
Explicit approval.
Next transaction is guaranteed to work. And
by way of saying we're not gonna charge you late fees or change any of the pricing.
We're actually telling you you should feel very good about this transaction. We are going to make less money if you're a minute late. We'll make no money if you don't pay us.
And we feel good about lending you this money. So what we sell or if what we offer to the consumer end of this is certainty and sense of control.
By way of creating some incremental friction.
Fast forward a couple of years, I don't have enough of a clear crystal ball to know exactly what agenda commerce looks like, but I know a lot of it is happening already, and I think a lot more will happen.
The discretization of transactions and this incremental friction.
Will be reduced.
You don't actually have to do all the manual labor we are putting you through right now.
Because your agents will do it for you.
And so today we're offering a thing in exchange for some friction.
In
Tomorrow's world, we're offering the thing that obviously works. Fifty billion dollars can't be wrong.
But the friction will go away or largely go away, which I think is just going to accelerate this whole approach to financial transactions and the way people think about money.
Will change.
towards I know exactly what the total financial state I'm in.
I have agents that are looking out for me. They won't get me into debt that I shouldn't be in. They will get me out of debt the second I should be out.
I will have a phd in consumer financing.
Embedded in my phone.
looking out for every penny I got. There'll be no slop. And by God, no one's gonna fool me again with fine print.
driven business model. So like the world in which you have AI looking out for all of your financial concerns is a beautiful world because we are already there.
By way of not having any dependency on Ah, you're too dumb to know what's happening to you, so just pay up.
That's how the industry a lot of the industry works today. So I'm very excited about the world where
You don't have to change your business model because suddenly no one's getting fooled because that was never a part of our business model.
I'm gonna ask you might be
Naive, probably annoying, but it's gonna be a like how long until X happens type of question. So I apologize in advance for that. But I look at say China and WeChat.
It's like the interface to everything.
In terms of purchasing you name it. It's
incredible what they've been able to do and there are a lot of reasons for that.
And then I look at say
Chat GPT, I look at Claude.
And
As you mentioned with that tap to pay, like a lot has to happen.
Under the surface.
When people say oh
Well
Chat GPT can just put
Adds into
The LM responses I'm like
You may be underestimating the relationship building that Google has done over decades and decades and decades.
There's a lot that goes into it, but I am curious to know.
How far away you think the reality is?
Where in someone can pull up a Claude or Chat GPT and
Ask questions and make
purchases directly from a single interface.
I don't know if that's the form it'll take. I suspect it'll probably be
At least there'll be attempts made to create something like that. And then everything will happen in the background, including presumably some type of
A firm like option, if you select to do that. How far off do you think that is?
It's very close.
It's very dangerous to consider commerce as this uniform
Fabric that just kind of
Wanna thing.
Buy a thing. One of the dangers, by the way, of building on
mass market products in Silicon Valley, if you're not inventing the future, in which case your Greenfield blank sheet of paper, if you're trying to improve something that exists and has existed for a while.
It's essential.
You travel to where normal people live and see what they do. Because we are not normal in Silicon Valley. And a global Silicon Valley. This is not limited to San Francisco and the Bay Area.
We
Think
You just want a thing and buy a thing. And if that thing is ten dollars, great. And if it's ten thousand dollars, well, you know, we get paid a lot. So
Okay, just buy the$10,000 thing and like you care about speed and efficiency and less distraction. And normal people actually hang back and like, whoa, it's$10,000. First of all, that's a an incredible amount of money. And by the way, for someone who is not
Within these hot
You know
Beds of
Growth and opportunity.
Maybe a thousand dollars is an incredible amount of money, maybe five hundred dollars is an incredible amount of money, depends on where you are.
And the sort of ooh, I gotta think about this. I want to make sure I'm not exposing myself to a bad financial decision.
I also want to make sure I'm getting a good deal.
How am I gonna pay for this? How long is it gonna be on my personal balance sheet before I'm done paying for it? Like those are all questions people are very conscious of. And so
For a lot of people
In every part of the US.
Agenda commerce is here when you tell Instacart, bring me a sandwich or bring me back your groceries and
DoorDash bring me a sandwich or vice versa.
And
That's like the threshold of is this enough money for me to sort of hang back and ask these questions?
So well that's who it is too much.
They're probably not using these services just yet.
For whom it's sort of like yeah, I want a sandwich and I want it now, and like I'm gonna outsource the rest of this to an agent, be it a human or a robot.
Don't care. Like you have my credit card number, bring me a sandwich.
And I think that's here today, and we will see more of that become a thing and
Many things like
real time delivery or near real time delivery. If you go to other markets, you have
I think in India somebody launched a
Like six minutes or less delivery service would.
Boggles my mind, but like
They're
storage of
Mass market.
Goods to buy an edge has gotta be just like an exercise and extraordinary logistical
prediction. Anyway, that stuff is here, it's coming, and more will happen.
The I want to know what I'm getting into. I want to have agency in selecting a thing.
My taste matters to me.
is a thing that
Probably will always involve humans.
Like I need a pair of pants.
is not actually a thing 95%. If you're Silicon Valley engineer and you're too busy coding and you just, you know, you have a big hole on your butt, you gotta need some pants.
Ha ha.
Agent, bring me a pair of pants. Like sure.
For mostly like I want to to make sure they
fit and I want them to be my favorite color. And I also want it to match the rest of my ensemble hair and so on. And so and it goes up from there. Like I need a bicycle, but I have
brand preferences and my components are important to me, et cetera, et cetera.
А й на реплезі.
In consumption.
It will obviate some pieces, like
Who has the best price on the bicycle I want, but the component tree that I prefer?
is a thing that you will gladly outsource. Like you need to make sure it's real, you need to make sure that the data you're
you know, LMs are fetching for you is current, but that's what we're working on today.
But at some point very soon you'll say, Hey
Chatbot.
of the moment or of my browser of my desktop.
I would like to buy
a beautiful looking Italian made bike.
With
Shimana components.
I want a good deal.
I'm probably gonna pay for it over time because it's expensive.
And I definitely want to pay no late fees and ideally I don't want to pay any interest.
I'm bringing my business to someone who should be so lucky because multiple people will sell me a beautiful Italian made bike.
And
Go do some comparison shopping for me, bring me some images of beautiful bikes, and I wanna lust after all of them and then pick the one that gets my business.
That's a great task for AI.
The building blocks for that will include something like a firm where the AI will say, All right, so all these people offer some ways of paying.
Some of them offer a firm which has no leaf fees.
And by the way, has negotiated a special deal with a manufacturer or the seller where they will pay your interest for you. So they're actually covering the time value of money. So the plan
is interest free, which a lot of our transactions are interest free exactly this way. They're funded by the retailer or the manufacturer.
And
We're like grasping at that future right now. We're certainly building a lot of the pieces, so I tend to be slightly
ahead of schedule as far as like the w the future I want to live in. I'm I'm trying to pull it in here.
But this is
Quarters, not years.
Incredible.
Man.
Ha.
For the foreseeable future, there's so much to build.
The thing that irks me the most in today's media is the SaaSpocalypse, whatever, but the job pocalypse people are proclaiming is so goofy. There's so much opportunity to build so many exciting things for everyone, not just Silicon Valley startup.
Everyone from the oldest companies to the youngest ones are like
Oh my God, there are all these pieces of software that I had to buy from someone who did a bad job.
Or
That I could never buy anywhere and I wouldn't know how to start with. Like, well, now you have all these amazing tools that just like
Birth it for you straight from your head.
Speaking of
Things you can put on your brain. Very soon we're gonna have
Ultrasound.
Mind reading that spits code on the other side of it.
That's what I'm waiting for.
Seems a lot closer.
Than I would have predicted.
If you asked me just a few years ago. It's wild.
The world changed a bunch of times over the last twelve months, but I think like the
Claud code moment.
Last December was like a big like whoa.
It really is here, the ability to produce something from
glimmer in your mind to like a thing that actually works reasonably well.
And
Has only improved since was like a big breaking point. The one before was obviously Chad GPT and so on.

Rapid fire questions.
For you.
Coffee.
We're gonna shortchange this one. I apologize. Maybe we do another podcast solely dedicated to coffee, but for people who want to improve their coffee experience.
Cheap option.
Intermediate option.
Ugadi.
Option.
Any thoughts?
on improving coffee experience.
I'm not paid by any of these brands, so I just wanna make it very clear. I have some very strong opinions.
You strong opinions? Come on. Yeah, exactly. All right. So first of all.
This is primarily relevant to espresso. I love all coffee in all forms.
I happen to prefer espresso as a beverage of choice, but I don't judge. She can have your lattes, your americanos, you know, whatever. But from the point of view of espresso and espresso based drinks.
The single most important thing is a grinder.
And so you can get a fantastic grinder like a
Nish or
Kind of these
six hundred dollars, seven hundred dollar grinders that will elevate your game.
To
an incredible level. If you have a grinder that you didn't pay a couple hundred dollars for.
Gotta go do that. If you want to get to like a
demonstrably better grinder than sort of the six hundred dollar range.
Go get something that looks like a Kaya Orbit. That's like a sixteen hundred dollar to two thousand dollar grinder. That's a great grinder.
You can swap out burrs, so s switching out burrs is really important.
But even if you're never gonna replace your burrs, you still want something that's a a fall through grinder and a good one will cost you on a on the order of two thousand dollars, plus or minus. And then if you're like
You know what, no price too large.
I'm gonna get me the absolute fantastic
Home grown. I mean, obviously there's like industrial strength stuff that's that's even out out there. There's this thing called Weber Workshops that produces unbelievably expensive, but unbelievably good stuff. So if you want a Weber
God bless. That's a great product. Same company that makes the grills? No different. It's got to be. I had this exact question yesterday.
Anyway, so better grinder.
Goes a very long way.
After that
Go invest in skills. So there's an incredible number of
Online resources that'll teach you how to do a great job.
I'm but a student of those people.
There are many, many, many great videos you can watch on YouTube that'll teach you how to make a great cup of espresso.
before you buy anything else, just go watch all that stuff because it'll it'll teach you a lot of things you don't know about.
After that, you're probably going to want to buy a good espresso machine.
The great news is that
There are many, many very good espresso machines.
I'm
Don't wanna begin religious wars here, so I'll state my preferences, but these are preferences. I prefer fifty eighth millimeter

Diameter.
Many people now swear by fifty-four, fifty three millimeter, you can go up or down, but I stick to the classics.
I think the finest, most reliable home machine is made by La Marzoco. That is definitely in the multi-thousand dollar range, but that's what I have on my counter and it's never failed me. And it's beautiful and both inside and outside. There's lots of cool, like if you're a super nerd and you really want to nerd out on the metrics, decent espresso is a fantastic product, really fun, but it's like
An Android tablet that happens to be attached to an espresso machine, basically. Lamarzo is old school. That that is the logo you'll find in every self-respecting coffee shop, like the long
Red typically.
Spelled out Lamarzo, that's uh
That's a granddaddy of them all.
It's amazing.
And so on. And there are many, many other brands that will sell you a good espresso machine.
If you're trying to go downmarket a little bit, but like bulletproof, we'll make a good cup every time, brevel.
People tend to sort of
Hate on it a little bit because it's so consumer, but it makes great coffee.
Yeah, Breville's surprisingly good. It's very, very good.
I mostly just wanted you to showcase
You my obsession.
Yeah, your obsession. I'm gonna force your hand though on one ear. We're gonna take a a side quest away from pure espresso territory. Chemics, French press, or aeropress?
You had to do coffee.
With one of those three.
Kellex.
Why Chemics?
If you're gonna go for a light roast
I mean e each type of roast, each type of bean speaks to a method. So I happen it's like another heresy, by the way, in the modern day.
I like medium dark roast for my espresso. I love the honeyed viscous.
feels like it's like too thick. You can almost chew it. Like I love that in espresso. Like that's a great cup of espresso.
For
non espresso drinks I actually love thin
High clarity, low body, just give me the pure
Essence of like
Not diluted, but like the bean in water.
And chemics are probably the best one of those. It's certainly the most controllable. Beyond that, French press is great. I mean, that's a like a campfire type setup. And
Air press.
Get an expressive machine.

Ha ha ha.
Chemics for those people wondering.
Will cost less than six hundred dollars. And I will say also
That
You can get
Correct me if I'm wrong, you're gonna know this better than I do, but you can get
They're not gonna be anywhere near as sophisticated as the devices you described, but
If you are using, for instance, a
Blade grinder, something that is not a bird grinder, and you get a handheld.
or grinder, which you can probably buy for
A hundred dollars or less. The difference between those two will still be noticeable.
What would you think?
You're like in the territory where I'd probably be like you know what
No coffee today. I'm kidding.
I've been known to uh
Exhaust the local supply of
Pre ground pods in hotel rooms. So uh
There's coffee and all the beauty of it, and then there's caffeine and you know, I need both.
They're not the same.
The uh spice grinders as they're known.
You can definitely make a cup of coffee with that too.
But that said, by the way, if you must have a thing that is not an electric grinder.
Get a manual grinder. Like those are very cheap. I think
Lido, if I remember correctly, is a brand that'll sell you like a very, very high end but like still
Yeah.
I mean it's a little bit of a you know good work out.
But you'll make beautiful coffee with that.
There's a
A really nice correlation to the lower the RPM
the less you're damaging, if you will, the bean as you're grinding it. So you can actually get some amazing taste.
out of manually ground beans. It does take like 10 minutes per cup though, so you gotta you gotta be ready. Yeah, this is what I'm talking about. This is exactly what I'm talking about. So I wasn't totally misspeaking. Yeah, the Lido OG manual coffee grinder. Yeah this one's two hundred and seventy three. There are some other options that I found at slightly lower prices, which I thought did a nice job. It is a workout it is a work out. Yeah.
But hey, switch arms every once in a while.
If you're gonna go into the ritual of it, I know people who have travelled
With
Something akin to that.
And Aero Press and some other stuff.
Air press.
Great campfire.
Attraction.
For sure.
Alright. I'm gonna destroy any shred of respect that you have for me with respect to coffee by also saying
Like if people want something simple, commented. Actually, I really enjoy some of their stuff. These frozen oh the face. If you guys aren't watching video, the the response that I just
By the way.
So I grew up drinking
Not just instant coffee, which was hugely popular in eastern Europe.
I occasionally was exposed to
Chicory coffee. Which I don't know if you've ever tried that.
Popular in New Orleans. They put a lot of sugar though.
Oh God.
So it's just like placebo. It's just like kind of sort of tastes a little bit like coffee, maybe. Like you pour enough hot water into it. If it's hot enough, you're like, ah.

Yeah, it was in Soviet Union was one was marketed under uh
Coffee light.
Coffee.
Beverage.
Stock?
Something meant to uh evoke some plant component that
Both.
Coffee bush and She would would share. So like, well, you know, it they both have it. So it's good enough. It was disgusting. But it'll wake you up.
So there is that. Yeah, chicory is pretty interesting from a fiber perspective, but I'll leave that for another conversation. Max last question. This might be a terrible question to end on, but I am curious for someone who is technical.
Or just a individual contributor in the sense that you were very technical and then grew into the CEO role. And running a public company, let's put that aside, because that's a whole kettle of fish by itself. But
Any books or resources that you would recommend to people who are
hoping to become a CEO for the first time.
Slash founder.
Yes. So here's a couple.
There's not a panacea.
But I will preface this by saying
I have extremely low
Degree by which I mean like zero to negative.
Of respect for business books.
Vast majority of them are far too long, present company excluded.
Yeah.

Business books that are verbatim anecdotes of people who've done it are actually high value because I think it's very hard to distill what is inherently a collection of unique experiences. So like you can edit it down, but you can't make it
Generalizable. Yeah, to generalize it like you're you're robbing the the reader of the true history of what really happened. So I'm I'm a huge fan actually of what you do in your books because there's always so much color
directly from the source versus I think this person meant X when they talked to me and I'm not gonna print anything they said. Anyway, that said I'm a big fan of business books that have been distilled to business essays because then I feel like the author did the work of like, I've got to generalize, I'm gonna really generalize it.
There's this book called Seven Powers by Hamilton Himler.
If you haven't read it, it's a really worthwhile distillation of what it takes to build a
Competitively.
lasting business.
It talks about
why network businesses are
longer living than non-network businesses and what brand actually means. Like be like, Oh, you know, I'm gonna build a brand. Like why do you care about having a brand? And so it's a great book. Distills a ton of these things that you kind of think you know.
But like they need names and terminologies. And it's it isn't gradic in the sense that I didn't think of the word power, didn't think of the term power until I read his book. And I found it to be a great kind of a
Distillation.
It's very short.
Slightly shorter than Master Margarita.
So anyway, that's a good book.
Another good book that is off the beaten path, but a great one.
Called a failure of nerve.
It's a book about leadership.
And it really postulates this concept of differentiated leader.
As a CEO, as a founder, a lot of times you find yourself at odds with your own team where you're making an unpopular decision, you're firing a beloved employee, the sort of whenever there's doubt, there's no doubt, then you go do it and be like, Holy crap, what have you done? So you find yourself in these moments where
You have to persevere before and then
after a decision that you made and and many, many flavors of it. It's a good book that kind of teaches you how to think about it, how to tolerate the stress that comes with it, how to sort of put up with the pressure you're gonna get.
And not lose your humanity and like not become a tyrant, but also not
B
Someone who is easily bowled over into like, Okay, okay, I'll reverse my decision because then you lose the confidence of the people you're supposed to lead. So
That's a great book. I am sure it's in your list and everyone's list.
But
you should read if you haven't read it, if you're trying to start a business, you should read Influence by Caldini because that is probably
The most important social science book
Published in the last
Fifty years.
So good. It's a great book. I'm shocked that I had never heard of Seven Powers and I just looked it up at the forwards written by Reed Hastings of Netflix. Had have never even heard of it. That's shocking. There you go.
I'm excited.
Podcast.
Any biographies they don't have to be business related, but biographies that have informed
How you approach leadership or running companies?
It could be indirect too, right? It could be a buyer for you.
And
How it informed your view on persistence, right, through stories or anything.
Therno wrote a bunch of these like tombs speaking of enormous books. So there's like everything from the JP Morgan. Hamilton. Yeah, yeah, exactly. Washington, a life, Grant, Mark Twain.
Yeah. So Mark Twain is a great one.
Titan is a huge one. So Titan is is probably the one that's closest to like business advice.
It's a bit of a like how to be ruthless, basically, but that's uh that's besides the point.
Yeah, it's uh the life of John D. Rockefeller. The cover photo
Looks just like the vampire in Nosferatu. It's terrifying. But yes. Exactly. Kind of apropos.
Those are great books.
There's a great book called
A mind at play, which is Claude Shannon's biography.
By the way, when I was preparing for our conversation, not nearly as well as you are, I was listening to your conversation with Ed Thorpe.
who I knew a little bit about, but I was like, Oh my God, that guy's flipping amazing. Like I wanna be when I grew up when I grow up. He's now like one A of the list of people I'd like to meet.
At some point in my life.

So incredible. He just seems like an unbelievable guy.
So he was friends with Claude Shannon. That alone makes him unbelievably interesting. So Claude Shannon is kind of like
a platonic ideal of what I thought it was gonna be before I left academia I guess like the
Guy's just like brilliant in every way. Like everything he touched became this flower of intellectual
Brilliant.
American polymath and mathematician, right? Yep.
Why does Shannon stick out?
To you so much. Fun fact, you know, Claude Code named after Shannon.
I did not know that. That's incredible. I didn't like learn this from
Anthropic people, but I would be shocked if that's not the answer. Claude is not a common name and
Shannon is obviously the inventor or the postulator of the information theory. Right. Father of information theory. So
Anyway, so he
Is
A great example of someone who worked on some very serious stuff.
And it was
Always
playful. He's like Richard Feynman of Computer Science. So Feynman was famously
Brilliant and with like there's a great quote from
Murray Yellman. Somebody asked him like what's your algorithm for solving really hard problems like
Encounter really hard problem. Step two, give it to Richard Feynman. Step three, receive solution.
So Shannon was kind of bat in computer science.
Proto-computer science, obviously. He was building this in the forties, fifties, sixties, and he managed to remain
fun. He managed to have fun. Like he was just this unbelievable
fountain of fun ideas and he was like a hardware tinker and made card counting devices and all kinds of hilarious stuff.
Yeah. Makes sense that he would know Ed Ed Thorpe, right? Who beat the roulette table. Of course. Exactly. And so that that's a good book about him.
These days it's so hard to read books because there's so much content online and like podcast and blog form that you're sort of like
I'll get to this thing it's
Content online feels ephemeral. So you're like
I must read this now because it might scroll off and I'll never see it again.
A book is in my hand. Like I have books in my backpack that I travel with that I've been meaning to read for half a year now and I still haven't opened them and just like carry the weight.
Hm.
I have a five hundred page graphic novel that I'm gonna be lugging to New York City because still the digital experience just doesn't do it, but
The burden I bear. I keep on looking for a great digital graphic novel.
Consumption.
Experience, but it does not come close.
Yeah.
It's not there. We'll be able to replay our dreams before we get that. Max.
So much fun.
To hang. Thanks for taking the time. And where would you like to point people? We've got levchin.com, we have sci-fi.vc, we have
Very social. Of course, a firm.com.
There's a lot we could point people to. Anything else you'd like to
Add, whether it's pointing people somewhere or closing comments, anything at all?
No, my work is out there. I try to build in public. If you're interested in a firm.
Obviously affirm.com is where you find that.
I tend to go deep so if my project list is short at any given moment, but Leftchen.net, Leftchin.com, either one is the list of those things.
Amazing.
Max. Thank you.
Again, for taking the time and everybody listening. We will link to all of the things we mentioned, books and resources and people and everything else, a firm, of course.
And on and on and on in the show notes, as per usual, at Tim Dotblog slash podcasts.
Just search Lev Chin, I can promise you if he will be the only one. I might be the only Max, in fact, on the podcast so far. We'll find out. I might eat my words.
And until next time.
Of course, thank you for tuning in, but be just a bit kinder than is necessary.
Two others, but also two.
Your self. And uh that's all for now.
Thanks again, Max.
Great to see you. Safe travels.
Hey guys, this is Tim again, just one more thing before you take off, and that is Five Bullet Friday. Would you enjoy getting a short email from me every Friday that provides a little fun before the weekend? Between one and a half and two million people subscribe to my free newsletter, my super short newsletter called Five Bullet Friday. Easy to sign up, easy to cancel.
It is basically a half page that I send out every Friday to share the coolest things I've found or discovered or have started exploring over that week. It's kinda like my diary of cool things. It often includes articles I'm reading, books I'm reading.
albums perhaps gadgets gizmas all sorts of tech tricks and so on that get sent to me by my friends including a lot of podcast guests and these strange esoteric things end up in my field and then I test them and then I share them with you. So if that sounds fun again it's very short
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Thanks for listening.
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One name that has come up on this podcast.
more than once is Dr. Walter Longo, USC professor with decades of peer-reviewed research on fasting, nutrition, and aging. And as some of you long term listeners know, or readers, I regularly fast. I've done a lot of experimentations with fasting over more than a decade, including intermittent fasting.
extended water only fasts up to 10 days, and I've looked at the before and after. Frankly, the fasting has been one of the most incredible unlocks.
that I have found the before and after looking at glucose control, oral glucose tolerance tests, hemoglobin A1C, et cetera. All these things that really do matter for the long term, for mental health, for physical health.
have had dramatic, dramatic shifts. And I've talked about that before. But the sad truth, the truth about fasting is that it can be really hard.
And that is why Valter is interesting. He's best known for something called the fast mimicking diet, FMD, which is essentially a way of eating that produces many of the benefits of fasting.
while still allowing you to eat.
food. So if we look at that a little more closely.
He took what he learned in these randomized control trials and so on and packaged it into a five-day program called Prolon, P-R-O-L-O-N. It's five days. So for five days, you restrict your food a bit, and what Prolon does is makes it
Idiot proof. Comes in one box.
Everything is laid out, there's no guesswork, you just follow the packages.
And in scientific studies, five-day cycles of the fast mimicking diet improved markers tied to metabolic health and aging, help people drop fat while holding on to lean muscle, and even associated with measurable drops in biological age, and to put some numbers to it with glycemic management, blood sugar management,
We were able to see one RCT improvements in 53% of FMD participants versus 8% of controls. So it does make a difference. You get the benefits of fasting, including autophagy, your body's cellular self-cleanup process, while still eating real structured plant-based meals. So
You don't have to negotiate with yourself.
You don't have to struggle.
It all comes in one box.
And it's right there. Laid out, simple to follow. And there are other people who recognize friends of mine like Patrol who also have used Pro Lon. For a limited time, Prolon is offering my listeners 15% off site wide plus a 40% bonus gift when you subscribe to their five day program. Just visit prolonlife.com slash Tim. That's P-R-O-L-O-M.
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