Max Levchin: The Interview

Max Levchin, Co-Founder of PayPal and CEO of Affirm, joins Sourcery for a wide-ranging conversation on building companies, surviving failure, and navigating one of the most important economic shifts in decades. We start inside Affirm HQ (with a masterclass in espresso) before getting into the story behind onboarding 800,000 Shopify merchants in a week, the lessons from PayPal that still apply today, and why the team is the single biggest determinant of success. Max also breaks down how AI is collapsing the cost and speed of building software — fundamentally reshaping company formation, competition, and the balance between labor and capital. As intelligence becomes more accessible, he explains why weaker, more “scammy” companies will struggle to survive in a world where both consumers and builders are more informed — raising the overall bar for quality, execution, and truth. In parallel, the widespread availability of AI tools may effectively increase baseline capability across the population, shifting what it means to be skilled, technical, and competitive. From reading research papers daily to staying ahead of rapid innovation cycles, he explains why this moment in AI may be even more consequential than the internet or mobile — and what it takes to build and lead in it. This was recorded March 30, 2026. Topics include: Building Affirm & scaling under pressure PayPal lessons & talent density Why ~85% of startups fail AI and the collapse of build costs Why low-quality / scammy companies will get exposed faster AI raising the baseline capability of builders Fintech, credit, and changing consumer behavior Max Levchin: ⁠https://x.com/mlevchin⁠ https://x.com/mlevchin Molly O’Shea: ⁠https://x.com/MollySOShea⁠ https://x.com/MollySOShea Sourcery: ⁠⁠https://x.com/sourceryy⁠ https://x.com/sourceryy 𝐄𝐏𝐈𝐒𝐎𝐃𝐄 𝐋𝐈𝐍𝐊 YouTube : ⁠https://youtu.be/yC_dWibdvHY⁠ https://youtu.be/yC_dWibdvHY 𝐒𝐏𝐎𝐍𝐒𝐎𝐑𝐒 • ⁠Brex⁠ https://brex.com/sourcery—The modern finance platform, combining the world’s smartest corporate card with integrated expense management, banking, bill pay, & travel. ⁠https://brex.com/sourcery⁠ https://brex.com/sourcery • ⁠Turing⁠ https://turing.com/sourcery—Turing delivers top-tier talent, data, and tools to help AI labs improve model performance—and enables enterprises to turn those models into powerful, production-ready systems. ⁠https://turing.com/sourcery⁠ https://turing.com/sourcery•⁠ VCX⁠ https://fundrise.com/vcx—VCX is the public ticker for private tech, allowing investors of all sizes to invest in venture capital. View The Portfolio at⁠ http://GetVCX.com⁠ http://getvcx.com • ⁠Deel⁠ https://www.deel.com/sourcery—Deel is the global people platform that helps startups hire, manage, pay, and equip anyone, anywhere. Trusted by more than 35,000 fast-growing companies, Deel is the people platform that just works, so teams can scale without the chaos. Visit: ⁠https://www.deel.com/sourcery⁠ https://www.deel.com/sourcery • ⁠Public⁠ http://public.com/sourcery–Investing platform Public just launched ⁠Generated Assets⁠ https://public.com/generated-asset, which lets you turn any idea into an investable index with AI. With Generated Assets, you can build, backtest, refine, and invest in any thesis with AI. Gone are the days of one-size-fits-all ETFs. https://⁠public.com/sourcery⁠ https://public.com/sourcery • ⁠Merge⁠ https://www.merge.dev/?utm_source=sourcery&utm_medium=sponsorship&utm_campaign=2026-03-31_influencer_sourcery—The leading provider of customer-facing integrations and agentic tools for frontier LLMs, Fortune 500 organizations, and B2B SaaS companies. Visit:⁠ https://merge.dev⁠ https://www.merge.dev/?utm_source=sourcery&utm_medium=sponsorship&utm_campaign=2026-03-31_influencer_sourcery Follow Sourcery for the latest updates! ⁠https://www.sourcery.vc/⁠ https://www.sourcery.vc/ Disclosure Paid Endorsement. Brokerage services by Open to the Public Investing Inc, member FINRA & SIPC. Advisory services by Public Advisors LLC, SEC-registered adviser. Crypto trading provided by Zero Hash LLC, licensed by the NYSDFS. Generated Assets is an interactive analysis tool by Public Advisors. Output is for informational purposes only and is not an investment recommendation or advice. See disclosures at ⁠public.com/disclosures/ga⁠ http://public.com/disclosures/ga. Matched funds must remain in your account for at least 5 years. Match rate and other terms are subject to change at any time.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Molly O'Shea?

  Have you ever thought about opening up a coffee shop?

• 0:02Speaker 01

  Totally. If I didn't do what I do for a living, I would just open a coffee shop.

• 0:06Speaker 02

  Enjoying my coffee.

• 0:08Molly O'Shea?

  How did you get into this?

• 0:09Speaker 01

  It's one of these self fulfilling prophecies. So I grew up in Ukraine and there's a culture of coffee drinking. And my dad was really into drinking espresso. So when I was like five years old, he would buy a shot of espresso at a coffee shop. So I'd have this visual, like a bag and a shot of espresso. I'd be drinking it right alongside my dad.

• 0:25Molly O'Shea?

  For drinking espressos at five years old?

• 0:27Speaker 01

  There's no prohibition on drinking espresso at eight years.

• 0:30Molly O'Shea?

  I recently had Keith Rabois on last fall and he said that you are a first rate technologist and also a first rate business strategist. So how did that combo develop?

• 0:41Speaker 01

  I started walked in thinking I'm gonna get a computer science PhD and just be a professor and walked out thinking can't wait to start more companies. Majority of American banks derive a disproportionate percentage of their income from late fees. A firm was founded in many ways to fight all of that and we are meticulously precise about the cost of credit. We'll do north of forty seven, forty eight billion dollars of loans this fiscal year alone. And yet that's a drop in the bucket. We've been public for five years and every single letter has a Big Lebowski quote.

• 1:10Molly O'Shea?

  Have people picked up on that?

• 1:11Speaker 01

  Until very recently, no one caught it. And then finally, one of the analysts wrote a note on us saying, Q2 fiscal '25, a quarter that really- Really tied the room together. Ah, show us this. They finally got it.

• 1:35Speaker 01

  Also, dude, having an amphibious rodent as a, you know, domestic, that ain't legal either. What are you, a fucking punk rager now?

• 1:47Speaker 01

  That's what I'm gonna say to him.

• 1:48Molly O'Shea?

  I'm gonna clip all of these into one-

• 1:50Speaker 01

  You should. I can, I can go on.

• 1:53Molly O'Shea?

  I'll do side by side with the actual movie. Movie.

• 1:56Speaker 01

  Every bit of stupefying. Some great one liners.

• 2:03Molly O'Shea?

  Just too good.

• 2:04Speaker 01

  Many learn men in, but in 15th century Rambam.

• 2:09Speaker 01

  A lot of Lebowski has these great sentence fragments where you have no idea where the character is coming or going to, which like cuts into this like.

• 2:18Molly O'Shea?

  Yeah. And you just naturally drop it throughout the day. Yeah.

• 2:22Speaker 01

  You said it, man. Nobody fucks with the Jesus.

• 2:28Molly O'Shea?

  So I recently had Keith Roy, actually, it wasn't really recent at this point, the years just flying by, but I had Keith Roy on last fall. And he was stringing out this rare combination of talent that he's very like, obviously rarely, never seen before and have come across. You were one of those people. He said that you are a first rate technologist and also a first rate business strategist. So how did that combo develop? Where's that come from?

• 2:59Speaker 01

  I mean, I grew up in Soviet Union, so obviously, you know,

• 3:04Speaker 01

  compensating for some lack of early business education right there.

• 3:09Speaker 01

  Keith is too kind. I think the I, I love computer science, like I, I was sort of smitten by some very early programming experiences as a either a teen or maybe even a preteen. So I was like, I was

• 3:28Speaker 01

  like 11 or 12 when I sort of first got access to some very basic programming tech. And it was like, one of these things, like, I'm definitely going to do this for the rest of my life. And I was on track to do

• 3:42Speaker 01

  computer science as kind of the final destination of my plan was to get a doctorate and teach. And. Couple of kids at school recruited me to go start a company with them, which failed. But I got bitten by the startup bug. And as I kind of went through life, starting more companies and failing at them. So I go, at some point you have to learn business. Otherwise, they're going to keep on failing. Because I was sure that they're obviously not failing for any software-related reasons. So it could only be the non-software reasons. And the internet businesses are basically some business strategy and some technology. And I was very confident in my ability to produce the latter. And so it must have been the former.

• 4:26Speaker 01

  But I'm not sure where Keith got his assessment.

• 4:33Speaker 01

  We have known each other a long, long time. It was at PayPal. We got to become friends there.

• 4:44Molly O'Shea?

  I asked him if there was a PayPal group chat and he said, no.

• 4:48Speaker 01

  That's what he knows. There's not a PayPal group chat, not that I'm invited to either. So if he's not invited, I'm not invited either.

• 4:57Molly O'Shea?

  I'm really curious. You have been an engineer throughout many different cycles now. What is it different now to be a technologist, to be an engineer? In this, I mean, you mentioned earlier, you're spending most of your time reading research papers. So like, what does it take to be a leader in AI? And also a CEO in this era?

• 5:24Speaker 01

  The cool thing about this moment in time. There's a lot of very good things about this moment in time. We're definitely living through

• 5:33Speaker 01

  an extremely uncharted territory again. Like the, I think it's possible that.

• 5:42Speaker 01

  I am the luckiest boy in the world in a sense that I got to come of age when the internet went from being largely green screens to being the web, which happened to be on my campus. So Mosaic was launched at University of Illinois the year I matriculated. So I sort of walked in thinking I'm gonna get a computer science PhD and just be a professor and walked out thinking can't wait to start more companies, basically because of the first graphical browser. And then I got to watch mobile and cloud and, and now AI, which is kind of, I'm not sure what else comes after, but it's already more than a lifetime worth of amazing experiences.

• 6:26Speaker 01

  It is the moment in time to be a CEO with a computer science degree. The, the unfair advantage for a long time has been if you know how to build software and you have product ideas, you can build some amazing things. The thing that's happened with the L M powered models is you can now go from I have an inkling in my head to I'm gonna build a prototype to I'm going to, not necessarily always your, on your own, but with a bunch of co-conspirators to build something that's production ready in a record short time. And if you do know what you're doing as somebody with a sense for how to build software, well,

• 7:08Speaker 01

  you don't need to vibe code yourself to a prototype and then hand it off to somebody who knows what they're doing. You can actually build something amazing and just ship it. And so the, the moment is

• 7:21Speaker 01

  quite, quite unique.

• 7:26Speaker 01

  The reason to read the papers and the reason to sort of keep track of what's, what's happening on the ground of the research is every morning something launches. That's nothing like you've seen before. The pace of innovation is accelerating, at least has been for

• 7:43Speaker 01

  Six, maybe 12 months now. And if you blink, you miss something. Just kind of stay, stay close to it.

• 7:51Molly O'Shea?

  What are you looking for in these research papers? Has it gotten redundant at this point? Like, what is new?

• 7:57Speaker 01

  Um, a lot of it is, I just look for inspiration. I think the thing that's happening right now across computer science at large is these glimpses of what the future will look like. And for a long time, in my professional career, academia was always

• 8:17Speaker 01

  either too abstract or too far into the future. You'd read a paper. So I spent a lot of my younger years looking at things like cryptography, which was sort of the first love that I, that I've had in, in CS. And you'd look at like homomorphic encryption and be like, wow, that's a fantastically interesting concept, but we don't really have nearly the computes. Like it's not going to be a thing in my immediate professional future. Or you'd look at

• 8:44Speaker 01

  quantum computing and like quantum attacks and post quantum encryption. And you're like, that's cool, but like, this is really going to happen in my lifetime? Will they have enough qubits to be dangerous? And with the eye, it's different where you're literally reading a paper like, yeah, somebody's going to implement it tomorrow and it's going to be available. And then everyone's going to take advantage of it. And so you read the papers, like what, what might come next? What, what will be the important news of tomorrow? So it's, you, you have to stay current.

• 9:10Molly O'Shea?

  I heard you used to write out code by hand. And so now I'm assuming you're writing code through LLMs.

• 9:20Speaker 01

  No, I just don't Claude code to write out my code for me by hand.

• 9:23Molly O'Shea?

  Send it right to Claude code. Do you think it's important for engineers to even learn the basic principles of coding now? Like learn to code was like the key kind of skill to go after for a while. Do you think that's still important, even at a basic level?

• 9:37Speaker 01

  I think so. I think the software engineering is kind of an interesting combination.

• 9:46Speaker 01

  I'm obviously biased, but it's a science, like computer science is a science, although Peter likes to point out that no science that is a real science needs to have its name, include the word science. Like, we don't say math science, we just say math. And so, but as a computer science graduate, I, I, I have a lot of affinity for the science of computer science. It's also an art form. Like, if you read code, or maybe we used to read code for, for fun, some code is more elegant than other, and you, you would readily see it like that, that's a beautifully written piece of software. And like, eh, that's kind of garbage, but you know, it does the job. And so there, there's a matter of taste and elegance in programming.

• 10:29Speaker 01

  And it's also a craft. When you actually look at well-made, production-grade code, so not like a project you built on your desktop, but something that you deployed on thousands of servers, you can identify if you know what you're doing. Like, that's a well-crafted piece of software. It's like a thing that, you know, someone could like stamp their brand, or whatever, whatever the, the term craftsman of, of yesteryear would use for this. And so, because it's such a combination of these three things, I don't think the LMs are going to naturally always deliver beautifully crafted, elegant, and yet scientifically correct code. And so you'll still need some degree of taste, even so much to converse with the LM to steer towards the,

• 11:13Speaker 01

  the right outcome. And for that, you have to understand what you're doing. Like, we, we may not spend a lot of time, maybe soon enough, we'll spend zero time, learning the exact minutia of syntactic decisions of each programming language, but the conversation with the machine around what you as a software sculptor would consider to be elegant, I think will remain. And that, that, that's certainly important to me as a, as a programmer. And I think without having a solid foundation in computer science, I wouldn't be able to have that conversation.

• 11:48Molly O'Shea?

  Have you started on any side quests?

• 11:52Speaker 01

  I have lots of side quests. I've always had lots of side quests. So the thing that's actually what's so amazing about this moment in time for engineering, for those of us who just know how to write code and take pride in being able to write a lot of code, the, unless you're current, and even if you are current, there's always a thing you've never done that, like, I've never built an iOS app. Like, I know how they work. I understand the frameworks that exist. I've seen the tools. I know people who are very good at building great iOS apps, but sort of the the ramp up to like, oh, I gotta set up Xcode and all the infrastructure to build a really good

• 12:31Speaker 01

  iOS app. It's a lot of work. Maybe I'll do it next weekend. With LLMs, the barrier to entry into an area of programming that you've never done before is nil. So I was annoyed at some remote control functionality that I have at my home, in my home AV system. So I decided I'm just gonna build an iOS app to completely get rid of my stupid remote and have a remote on my phone. And

• 12:57Speaker 01

  normally, a year ago, like, I have to learn how to build iOS apps. I have to learn how to interface with this audio/video system that I have. That's a lot of work. Maybe next weekend. This time around, like, well, I can just ask my favorite agents to go research this stuff and set it up for me, and then I can just focus on exactly the functionality that I want and the implementation quirks that I'm interested in. And now I have a remote that I haven't touched my physical remote in quite some time. It works for them. So that's, that's a side quest that manifested itself as a, as a new app on my phone. It's also the first app I've ever built. And I've since built a bunch more apps, because it seems fun and easy now.

• 13:31Molly O'Shea?

  Like, what? Did you build your own DoorDash? Like, everyone would open claw?

• 13:34Speaker 01

  No, I think that that's the silliest thing people have said. DoorDash is not important by way of having a great app. It's important because it integrates with all your favorite restaurants. So until Open Claw can also do things like call every restaurant and negotiate with the owner and install the right kind of tablet and software and extract the menus and all the things that DoorDash did. I think DoorDash is actually quite safe in their business.

• 13:59Molly O'Shea?

  Well, what companies do you think are most vulnerable because of this?

• 14:02Speaker 01

  I think companies that have built software poorly and just sell that software. Are very vulnerable. Like the, the bar for quality of software is going up rapidly. The, yeah, it kind of sucks and has bad interface, but it really serves an important function and I can't be bothered to hire engineers or build the same thing myself. Like that, that excuse is gone. Like if, if you really hate some piece of software that you're using and it's just software, it doesn't have some deep sort of proprietary data, proprietary source of value, it will get replaced. Like there's no reason why not. So I think that part is, but that's sort of the,

• 14:45Speaker 01

  it's long overdue to get rid of bad software.

• 14:48Molly O'Shea?

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• 15:34Molly O'Shea?

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• 16:19Molly O'Shea?

  What are the largest changes that you've made in this new era of AI to a firm? How has this changed the way that you're either leading or engineering?

• 16:28Speaker 01

  I think most of what we've done has actually been fairly organic. We've definitely focused our engineering teams more and more on mastery of the tools that are available. So for a while, we'd sort of had this point of view of like, you're writing code, you're writing code, do whatever you like and have whatever tools you want. And as the tools improved, we had become more and more sure of what works for us and what we don't like. And so we've been sort of switching the

• 17:00Speaker 01

  from all comers welcome as far as tooling is concerned to some fairly prescriptive ideas and what works well for us as a company.

• 17:12Speaker 01

  I think more than anything, the expectation of how much can we ship and what quality we are willing to allow has increased and that's good. We, you know, these tools are fundamentally about productivity gains and that those have been amazing.

• 17:27Molly O'Shea?

  How do you think it affects commerce? How do you, how do you think commerce gets impacted?

• 17:32Speaker 01

  I think commerce is a very broad topic. There are many different kinds of things people buy. And some of them are already agentic, like DoorDash is agentic commerce. When you tell DoorDash, you're not speaking to a human, you're not discussing your basket with a person, you're telling an app, I need more bananas. Like you can tell your app or soon you'll be able to tell your app, I need bananas every week. Like my potassium, gotta have bananas. And so that's agentic. It's just out there replenishing bananas for me.

• 18:06Molly O'Shea?

  Can't have any cramps while you're biking?

• 18:08Speaker 01

  No, it's very important. But I think some parts of shopping are inherently entertainment. Like when I'm picking a gift for my wife or I'm trying to find something that will amuse my children. I don't want to outsource that. Like my taste is, you know, just the right amount of personal and quirky that outsourcing it to a robot, no matter how good it is at being me, won't feel authentic. Or at least I wouldn't believe that it will feel authentic to the recipient. So forms of shopping that are pure entertainment are never going to go entirely robotic. And then there's everything in between. There's things like price discovery, there's things like deal hunting and all of that is sort of fairly easy to imagine if you're.

• 18:54Speaker 01

  Whenever you caught yourself thinking, I wish I had an assistant to do this for me, you will now. That's where it's all going.

• 19:01Molly O'Shea?

  You've said that credit has devolved. What do you mean by that?

• 19:05Speaker 01

  So look at the history of credit. It kind of began as a form of sustainability measure for farmers. So it goes all the way back to roughly 2000 plus or minus B.C., where businesses, farmers, that would go through these periods of abundance once they harvest and sell their grains and need capital to seed and

• 19:32Speaker 01

  process their crops, they needed to borrow money. And so that credit emerged as a means of like, I know you're growing something. I know you're gonna have access to revenue later. I'll give you money now and you can pay me back later. And so buy now, pay later is a fairly old concept. For a very long time, until Middle Ages, you had a fairly well self-governing incidentally, there were no consumer protections. Although Code of Hammurabi apparently has

• 20:02Speaker 01

  parts of it that describe things like, don't screw your borrower, don't overcharge them. And obviously, there's both biblical and Quranic prohibition on excessive interest, or in some cases, pure interest. And so it's the idea of like, don't screw your customer is, has been with us for a while. And like, in the last 100 years or so, we've rapidly left the whole, don't screw your customer idea as like a footnote of history where you now have, you've gone from interest that's easy to estimate because it's simple, doesn't compound, to only really doing compounding interest. And I haven't looked in a little while, but majority of American banks derive a disproportionate percentage of their income from late fees, which is sort of like, so that's actually like a really

• 20:43Speaker 01

  good example of devolution of credit. So a late fee was obviously conceived as a means of slapping your wrist and saying, like, if you're gonna be late, I'm gonna remind you, like, it's not gonna be a lot of money, but it's gonna be enough. You're like, ah, I wish I weren't late. Should be better next time. At some point, someone said, wait a second. That's a hundred percent gross margin product. When I charge you a late fee, you just pay me more money. There's no cost other than like sending you a nasty gram. You're like, of course, of course, I'll pay you a late fee. So it's better if you're late a lot because then I'll make more money. And it cost me nothing to create that revenue line. And so over time, credit just started skewing more and more into this bucket of let's do things that are not at all pro borrower, that's just great for revenue.

• 21:28Speaker 01

  A firm was founded in many ways to fight all of that and destroy the ridiculous and the exploitive.

• 21:38Molly O'Shea?

  What do you think the biggest misconceptions you're still receiving about buy now, pay later? What were the biggest hurdles even starting?

• 21:49Speaker 01

  The starting actually wasn't all that hard. And initially, people didn't believe that for a long time, we would tell people we don't charge late fees, never have, never will. And they're like, yeah, sure, you say that. And it would say, all right, well, this interest rate is zero. So a lot of our loans have no interest. And people are so used to this idea of like, it's a zero percent rate, but there's a tiny asterisk. And if you read the fine print, it's like, it's not really zero. It's zero for now, and then it changes. And so we've built a company to fight all of that. Like, we are fastidiously precise about the cost of credit. We don't compound interest specifically to make sure that we can pre-price every loan

• 22:33Speaker 01

  and say, you're borrowing $500 and your total interest charges will be $25 or $0 if somebody else or merchant is paying your interest for you. And for a long time, consumers were sort of like, yeah, you say that. But there's got to be something in a fine print. One of our core values is no fine print to remind ourselves and the rest of the world that we were not hiding our business model in there. So that was kind of the early stages, probably the hardest thing to persuade people of. These days, the perception has actually shifted. Our customers know exactly what we're offering and why we're here and they love us for it. I look like a

• 23:11Speaker 01

  Logo carrier 24/7 because I love getting stopped in like flights or coffee shops. You're like, oh, you work for a firm? That's so cool. I love your company. And it happens to all of us, not just me. Like, a lot of people here love the experience of like having our logos on because people like the product so much. People who don't use a firm sometimes will trot out objections along the lines of, well, somebody's borrowing money. Doesn't that mean they don't have their own? Shouldn't they just be like buying with the money they have? Like, news flash, half the country revolves on their credit cards, which means that they're paying interest over and above what they could pay back to their credit card issuer that month.

• 23:55Speaker 01

  If you're going to borrow money and pay interest, you should not be paying compounding interest. You should definitely not be paying deferred interest. You should, generally speaking, not be subject to late fees or snooze fees or any other kind of fees. And so building a better system takes time, but people who use us know exactly how good we are and appreciate us for it.

• 24:15Molly O'Shea?

  What is it like being a public company and going through these cycles? And like, I guess, what is the biggest pushback been from institutions, retail?

• 24:28Speaker 01

  Most

• 24:32Speaker 01

  people who understand who we are and what we're here to do and how long term we're thinking

• 24:41Speaker 01

  don't really have a lot of pushback. If you look at our performance, certainly over the last few years that we've been in public, we've consistently underpromised and overdelivered over and over and over again. And as much as the whole quarterly system is a little bit silly, like, why is it a three-month boundary that you need to get a letter grade for your performance? It, you know, it's a

• 25:03Speaker 01

  performance reporting system like any other.

• 25:07Speaker 01

  We've been very, very good with the actual metrics that we're graded on, that we want to be graded on. And as far as shareholder feedback is concerned, there are two groups for any company, not just us. People who are inherently interested in the short-term performance, people who are inherently interested in the long-term performance. I have absolutely zero time for the former group. I only care about people who are here to ride along with us for the mission, which we said will, will, will take a few more years. We're just starting to get close to a couple percent of e-commerce and maybe in some foreseeable future, we'll get to 1% of total commerce in the US alone.

• 25:50Speaker 01

  So we're very, very small on a relative basis. We'll do north of 47, 48 billion dollars of loans this fiscal year alone, and yet that's a drop in a bucket. So before, before the final grade is issued, we got a probably a few decades to go. But those who are willing to come with us on the journey, I think are seeing that we are excellent at executing on this mission.

• 26:16Molly O'Shea?

  How do you measure performance through all of this? One of our, not one of our, our key sponsor, our favorite sponsor, Brex, who I think you're an investor in.

• 26:25Speaker 01

  I am.

• 26:25Molly O'Shea?

  We have some merch for you, by the way. It is a limited edition hat. It's beautiful and we'll give it to you. But so with Brex, they're all about performance, spending smarter, moving faster. How do you measure performance for a firm? And like, what, what are the different benchmarks you're trying to hit each year? Is it qualitative, quantitative? How do you determine that?

• 26:45Speaker 01

  Very quantitatively driven company. We measure a bunch of different metrics about the company.

• 26:55Speaker 01

  Like, like any fairly sizable enterprise at this point, we care about revenue, care about, we've committed a few years ago now to get to profitability and, and did. And so just measuring profit and growth of profit is important. And then

• 27:18Speaker 01

  The sort of quantitative qualitative thing that we care about is what we call building a high performance culture. So we really care about making sure that we're not just

• 27:30Speaker 01

  hitting some numbers, but are doing so efficiently. We're doing that with

• 27:37Speaker 01

  minimum necessary team growth. In other words, acquiring more operating leverage and and so on. So we those are kind of the three major areas that we measure for ourselves. Keep on trying to find a way to embed a way to have fun in in our metrics. We have a lot of fun here. That's for sure. Probably sometimes more than more more

• 28:02Molly O'Shea?

  Too much fun.

• 28:03Speaker 01

  There's something that's too much fun, but maybe more than

• 28:08Speaker 01

  some of our commentators expect us to have. But I'm can't take yourself too seriously. In fact, the more long in the tooth you become as a publicly traded company, the more you have to find ways to goof off. We do that. But trying to embed sort of fun metric is a unfinished project.

• 28:31Molly O'Shea?

  Interesting.

• 28:33Speaker 01

  The number of Big Lebowski quotes in per share all the letter is a good fun metric.

• 28:39Molly O'Shea?

  And has have people picked up on that?

• 28:42Speaker 01

  Yes. So it we've been public for five years and every single letter but one has a Big Lebowski quote or or five, like it's plentiful, like there's it really doesn't take a lot to find him. And so there's like 19 letters or something like that. That actually it's not true. The first year we didn't write letters. We just recorded speeches, which was terrible. So we've switched. So maybe 16, 18 letters. Each one has a Lebowski reference. And until very recently, no one caught it. And it was like a way for us to amuse ourselves entirely, kind of in our own echo chamber. And then finally, one of the analysts, I think like three quarters ago, one of the analysts wrote a note on us saying,

• 29:29Speaker 01

  A firm, there was like Q2 fiscal 25, a quarter that really tied the room together. Ah, Shupskis, they finally got it. So now there's definitely, there's definitely analysts that, not all of them write it, but definitely many of them will reference some Lebowski is like a secret language.

• 29:51Molly O'Shea?

  I feel like I've interviewed a handful of public company CEOs at this point. And I can, I can tell that they, they're bored by quarterly reporting and they're all trying to do different things, like keep it fun. So I guess with yours, it's big Lebowski quotes. Some of them are doing live streaming. Some of them are doing like different kinds of like theatrical shows, like that kind of thing, like what like, how was it, what is it like?

• 30:17Speaker 01

  Bored is not exactly right. It's an important thing, like you, you don't want to take to the moment where you're disclosing everything that happened in the last 90 days.

• 30:32Speaker 01

  You can't make mistakes. You might, might be shareholder fraud if you do that and so on. So you have to be pretty careful. And it is also a moment where all eyes, or at least the eyes of those who care are on you. And so it's a, it's a momentous occasion. It's not, it's not a, it's not a joke. In fact, it's so momentous that a lot of people become so wrapped around the axle of like, oh, the quarter's coming up, you know? Like I know CEOs, I used to know CEOs that would like lock themselves in a conference room for a week at a time before the quarterly reporting and surround themselves with numbers and pour over the metrics and like really take it very seriously. At which point it becomes more about the quarter than about the actual, more about the report than the quarter.

• 31:15Speaker 01

  And like, that's definitely a mistake, like spending a week obsessing over something that happened that ended six weeks prior is clearly a huge waste of time. And so like, how do you balance the need to show up and speak and be intelligent, be interesting, sort of obviously get your analysts to sort of understand what you've done and write thoughtful notes to shareholders? But also like you have a company to run this. This is sort of a moment in time and you know it's one day and then it's over and you go back to work. And so the best I know how to do it is you just you take it as seriously as you must and you prepare and you do the work. But you have to embed some fun, otherwise you're just not gonna enjoy the day and

• 32:01Speaker 01

  the market is unpredictable. So if you're you think you did great, the market sells you down or you did nah and you're kind of bummed and the market buys you up. You're not gonna be able to understand it anyway. So the only answer that I know is try to have fun.

• 32:16Molly O'Shea?

  Is your mood impacted by stock race?

• 32:19Speaker 01

  Not really. It used to be at some point where I thought there was a

• 32:25Speaker 01

  any correlation between

• 32:28Speaker 01

  our performance and the price action in the moment, I would sort of look to it to understand, hey, what is what is the market telling me now? And over time, I realized that

• 32:40Speaker 01

  even like in a few days during and before and during and after public reporting, there's so much going on in the market. It's it's almost not worth paying attention to. So you can't not look, but you can't ascribe too much value, too much signal value in what the price is doing during earnings or after earnings. And so I think there's a famous quote, I think it's Graham, but it's ascribed to Buffett and others for luminaries. In the short term, the market is a voting machine and a long term, it's a weighing machine. And I'm a big fan of reminding myself, if the price is going up a lot, you can overlook that if I was going down a lot, it's important to remember, but either way,

• 33:24Speaker 01

  you're working for the long term. If you're willing to drop everything and look at the short term, you're joining the group of investors that I said, I don't care about. I certainly don't want to do that.

• 33:34Molly O'Shea?

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• 34:19Molly O'Shea?

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• 35:04Molly O'Shea?

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• 35:21Molly O'Shea?

  A lot of value is now stuck in the private markets, and there's pressure for those companies to go public or do something. What advice do you have for those CEOs that might be on the fence of going public or trying to time the markets with it?

• 35:38Speaker 01

  Timing the market is always a very tricky thing to do. I'm not sure I have any advice for those who are trying to time the markets.

• 35:48Speaker 01

  See, there's only so many useful things you can say. I mean, going public, most people will tell you it's this long, protracted affair and it's so hard and it's, it's actually not. Like, we decided to go public in September. We were basically ready with everything by November. In December of

• 36:05Speaker 01

  2020, the SEC told us, please, like, don't come out this year. We're so overwhelmed by all these companies trying to go public. Could you please hang on and like do it next year? And so we went public in early 21, but in reality, we could have been out less than three months after we decided, like, literally rolled out of bed, going worrying and said, let's go public. And what do you know, it takes less than three months. So I think the the effort is manageable. You have to have the team for it. You have to have the degree of financial

• 36:40Speaker 01

  metric keeping and ability to report to to the level that public markets require. And this is he is does not kid around with like what requirements are. So you very quickly find out if you have it or don't. But this sort of the the writing of the S one and the the produced roadshow, all of that takes very little time.

• 37:02Speaker 01

  In terms of whether it's good for their shareholders and sort of the the actual cap table management,

• 37:09Speaker 01

  which company is pretty unique. I know if there's a one size fits all. We were ready to go. It was it was the right thing for us to do. I have no no regrets or or issues with it. And you're you're signing up for a different kind of

• 37:26Speaker 01

  conversations with your employees where sometimes they will look at the price of the stock and opine on whether that they're being compensated well or not. And that that's an important new consideration you'll have to deal with.

• 37:37Molly O'Shea?

  You're also an investor in many companies. We mentioned this. For the companies that you've invested in, I'm I'm wondering, like, because there's been so much built up valuation inflation on the private side. Are you worried at all for them to go public and get repriced? Would you recommend they get repriced or like, is it a momentum tale? Like, what, where's the ten? There is a lot of tension there. So like, where where do you think that lands? Do you think that a lot of companies are going to have to be repriced?

• 38:11Speaker 01

  It's always super hard to tell. These things are so.

• 38:16Speaker 01

  I am sure there are companies that are

• 38:21Speaker 01

  do some unpleasant news from their last private round to their IPO. But again,

• 38:28Speaker 01

  I'd like to believe that the companies I have the privilege to be a part of as a shareholder, as an investor, are doing it for the long term. So the day of the IPO is the beginning of the public journey, not the moment where I finally I can just unload this thing. If that's how you're thinking, you don't really care if it's getting repriced or not. You're just hoping for liquidity. I think if you're looking at something where you're thinking like, wow, it'd be amazing to have institutional shareholders and the brands. One of the positives of being a public company is people recognize it. People know who you are just through the news cycle, just tuning into CNBC every once in a while. You hear the company name mentioned. So

• 39:13Speaker 01

  if you're prepared for that journey, if you're ready to take it through the next 10, 15, 20 years, then it's time to go public. And it doesn't matter if on day one, you're below your last private round. The question is, where do you end up five years from now, 10 years from now?

• 39:28Molly O'Shea?

  Really wanted to ask this even before we started, but

• 39:33Molly O'Shea?

  you're a very well read person, clearly care a lot about finance and payments. And

• 39:40Molly O'Shea?

  I just recently interviewed the CEO of Roblox and he created an entirely new digital economy. He created like a game to create entrepreneurs, which I think is like quite underrated, especially for a generation of socialists. They're secretly capitalists. They don't even know it. But I'm curious from your standpoint, after studying finance and economies for so long, how would you construct your own economy? What would the payment system be like?

• 40:07Speaker 01

  Modulo recent proposed perversions as a generation of socialists. I think we actually have a pretty good economy. Take it from somebody who had spent his first 16 years under the warm embrace of collectivism, as a certain mayor recently put it. Socialism sucks. It is terrible. The only people who do well in redistribution of wealth are the ones doing redistribution. It's fundamentally corrupt and there's not enough bad things I can say about socialism. So I think capitalism works exceedingly well, especially when the competition is encouraged

• 40:50Speaker 01

  and allowed to flourish.

• 40:57Speaker 01

  I think the, I'm a huge fan of Roblox and I spent a fair amount of time before I formed studying these closed system economies. Roblox is one of them, but there are many more that came before. Second Life is a sort of a canonical example of a economy that was built whole cloth from nothing and people were able to find value in things that were made of pixels, which is kind of amazing because there's no utility. That's just there for aesthetic pleasure and ephemeral value. I think

• 41:35Speaker 01

  it may be a lack of imagination, but if you look at the success arcs of these systems, over time, they resemble US economy more and more, sort of like they typically start out with a fixed money supply and like, we'll figure out how to inject more money later and then suddenly more people come in and you need more liquidity. And so they sort of start pegging their currency to the dollar or floating it or it becomes more and more like the real world. And so we've had thousands of years to evolve a fairly good economic model and US is most certainly 1A in the right way to do it. So.

• 42:21Speaker 01

  I don't know if it's

• 42:24Speaker 01

  obvious how you'd improve on that. In fact, I would argue probably can't. Like, I'm a big believer in evolution and we've had all sorts of experiments. You know, we went from

• 42:36Speaker 01

  gold standard to floating money to all sorts of central banking policies and ended up in a pretty decent place. And I suspect

• 42:47Speaker 01

  I don't know if I have a lot to contribute.

• 42:49Molly O'Shea?

  Well, we do have thirty nine trillion in debt.

• 42:52Speaker 01

  As long as we can produce enough value to compensate those that hold it, we're gonna be okay.

• 42:58Molly O'Shea?

  I think people were like, holding out and hoping that AI would help cover the difference with that. Do you think that's possible? Do you think that's still a narrative?

• 43:08Speaker 01

  It's hard to tell. It's a really good question, actually. And the question is, where does value accrete in this new age? On the one hand, it's very tempting to say, well, we're the country of our resources and our access to physical resources and capability that we have to build and innovate and sort of create things out of atoms. Having this incredible boost of productivity expressed in bits is just gonna be incredibly powerful and leapfrog anything and everyone that is remotely eyeing our supremacy.

• 43:45Speaker 01

  You could also make the argument that all these countries where there's precious little by-way of resources are now boosted tremendously by advances in AI. I tend to believe in the former, just because I'm being an American by choice. You sort of better be a patriot, otherwise, what exactly were you thinking? And I am. So I tend to think that we will probably end up with just a amplification of our advantage. That said, we're not without rivals on the world stage. And so we'll have to compete, but I'm a big fan of competition.

• 44:19Molly O'Shea?

  Who do you learn most from?

• 44:23Speaker 01

  I try to enter every conversation

• 44:27Speaker 01

  asking myself, what will I learn from this person in this moment? So I like to believe I learn a lot from everyone I encounter.

• 44:41Speaker 01

  I really love learning from

• 44:45Speaker 01

  very technical CEOs these days. Because all of us are trying to keep up and sort of do our day job and run a company and set strategy and sort of figure out what the future looks like. But also by night, we're suddenly all back to writing code, which we thought we sort of did the last of five years ago or 10 years ago and like production environment, like all of us who loves programming tinkered until recently and suddenly you don't have to tinker, you can just build and actually produce real products and kind of watch your work go live. And so reconciling this opportunity and sort of amazing moment where coding is fun again

• 45:23Speaker 01

  and easy again with the need to run a big company is a lot of fun, but it's also a real challenge. And so talking to people who are in the same position recently has been breath of fresh air because I get to find out about their productivity hacks and sort of share my own.

• 45:44Speaker 01

  Yeah, it's really rare that I've talked with someone and think like, wow, there's nothing to learn from this person.

• 45:53Molly O'Shea?

  Surrounded by smart people.

• 45:55Speaker 01

  Part of why Silicon Valley and California warts and all is a pretty great place is there's such a concentration of really smart people. They're fun to learn from.

• 46:05Molly O'Shea?

  As we wrap up, Max Levchin, what is your hottest take right now?

• 46:10Speaker 01

  Like the king of cold takes. Everything takes, I'm a very slow thinker, I'm a slow reader, I'm a slow thinker. Everything takes a long time. I go with these super long bike rides just to think about thinking.

• 46:23Speaker 01

  See if I can come up with a hot take for you. If you look at the business models of lenders in the US for sure, probably worldwide, a huge percentage of it is based on sort of two unsightly practices. It's betting on the idea that you'll screw up and go unnoticed in time and then I'll make some money. And on the idea that you're not really going to bother reading the terms and conditions. You're just gonna get your money and go and then later on we'll pay for it.

• 46:58Speaker 01

  And I think with AI as AI actually perforates all the way down to consumers like not Silicon Valley people, not like normal people in middle America or middle of the world, just using AI tools for the most basic daily tasks with money.

• 47:19Speaker 01

  This whole genre of let's make money when you least expect it, or let's screw you and hope you don't notice, or let's just charge you some fees because you won't be able to catch on quickly enough. Like, all of that is going to get flushed out because no AI is ever going to be like, oh, you've given me a task to find you a good loan. I found one that's going to take advantage of you. Hooray. Like, absolutely not. Like, we're not going to let that happen to you. Like, my job as a robot is to take good care of you. So I think you'll find, and it's broader than finance, but I care a lot about consumer finance. But in general, I think the net IQ of the world is about to go up like 50 points. Like, we're surrounded by people, not in Silicon Valley, of course.

• 48:04Speaker 01

  To quote the Big Lebowski, not a nom, of course. Right.

• 48:10Speaker 01

  The average IQ is still 100. I think the average IQ with AI in your ear at all times is about to go up to 150, which is like north of the genius definition. So very, very soon,

• 48:24Speaker 01

  the willingness to put up with random, obnoxious things, like low quality, or crappy terms, or products that pretend to be something they're not, like, all of that is just going to get flushed out very quickly. And companies that have business models that are buried in a fine print of some kind are all in for a very rude awakening, which I'm very happy about. But I think that's a, that's a reality most people have not fully contended with, which I'm excited to take advantage of that for now.

• 48:54Molly O'Shea?

  Amazing. Quite the optimist.

• 48:56Speaker 01

  I'm an optimist. I'm an extreme optimist.

• 48:59Molly O'Shea?

  This is a perfect way to end the conversation. Thank you so much for having me here today at a firm. I love the espresso. Love the tour of the office. It's kicked in. I'm about to go for a bike ride.

• 49:13Speaker 01

  Definitely go for a bike ride.

• 49:14Molly O'Shea?

  No, but thank you so much. This was a great conversation.

• 49:16Speaker 01

  Thank you.

• 49:17Molly O'Shea?

  Hey, it's Molly. If you enjoy our interviews, check out our newsletter, sorcery.vc, where we deliver a once a week top deals and tech headlines email and also go deeper on our podcast interviews. Subscribe to Sorcery today. And don't forget to subscribe to the podcast on YouTube, Spotify, Apple, or wherever you listen. Link in description to sign up.