“I’m probably more in tune with consumer naivete,’’ he says. In ato investors in Affirm’s pre-IPO filing, he vowed to hasten the decline of companies that “peddle toxic financial products and derive profit from their consumers’ missteps”—citing in particular the credit card model that finances big purchases interest-free but hits the customer with deferred back interest if the tab isn’t paid off in time.
In 2012, Levchin was brainstorming startup ideas with friends when Alex Rampell, then-CEO of payments company TrialPay, suggested a service that could make it easier to finance purchases online by assessing risk based on Facebook profiles. Rampell, Levchin, Palantir cofounder Nathan Gettings and serial entrepreneur Jeff Kaditz—whom Levchin had met through cycling—became Affirm’s cofounders and began work on lending algorithms.
Pre-Covid growth came in fits and starts, as Affirm signed up major new merchants. It issued $2 billion in loans in 2018 but was burning cash. By 2019, Affirm had raised $1.1 billion in debt and equity, and its valuation was $2.9 billion, according to PitchBook. “Any other company would have struggled early on to keep raising money,” says one venture capitalist who passed on Affirm. “Max assembled a machine with a cost structure that needed a lot of volume to make [it] work.
Clearly, Affirm will be challenged to live up to its valuation of $26 billion—at 44 times trailing 12-month revenue, it’s priced like a tech company, not a lender or even a mature payments company. To keep growth going, Levchin has made some big and expensive moves. In July, in a deal to become the exclusive installment-financing service for e-commerce platform Shopify’s U.S. merchants, Affirm gave Shopify warrants for 5% of its equity—securities now worth $2 billion.
I spent 35 years dragging myself out of poverty and prison to get an 800 rating and NOW we want to end credit?
the great reset Bullshit... do you have your alternative ready? The Greater Reset is waiting, the people’s reset
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