How Max Levchin Built the System Behind 90% of U.S. E-Commerce

34:28If you're a professional hired gun CEO who's been placed into a role to run a payments company, for example, you must have been in payments your entire life. Like you are a serious, very, very knowledgeable payments person. So you know what is like a ridiculous, completely unattainable ask. You're probably not going to make it. And moreover, even if you did, you know in your heart of hearts that it's probably on a table. And more importantly, you don't have the moral authority to sort of put your fist down. We're going to go do this thing, however crazy it sounds. You're a founder CEO and you think of yourself as kind of a curious amateur with a bit of a crazy streak.

35:04You're like, I'm definitely going to ask for this. It's probably not going to work, but no one else knows. So just like, let's see what happens. So I think there's this sort of incredible gap of ability to ask of the team to deliver these outsized growth gains or sort of products that seemed impossible or ideas that are probably not acceptable to the normal path that the sort of traditional hired gun. And I don't think it's like a true founder versus non-founder is a black and white and it's impossible. It just, I think, is a good first approximation. I'm sure there are hired CEOs who are not founders who are capable of these sort of more evolutionary than evolutionary approaches.

35:57But more often than not, the founders get the advantage of that. Yeah, no, it's, you know, but when you're doing PayPal, this wasn't the prevailing knowledge, right? I think kind of it is now, but back then, probably not. that's definitely true at the time i remember having routine conversations with our venture investors around well for a while you guys are going to be run by this amateur team none of you have ever done none of you have ever taken a company public none of you have ever been public company officer or c-level you know whatever so eventually they'll be the replacements will come in sort of serious people will come and uh when we took the company public rilof was the youngest chief financial officer to take the company public ever.

36:39And that was like a big topic. Like it was 29 years old. And so like, Oh, you know, be still my gap hearts. You know, how can this 29 year old possibly do the financial, uh, top level financial job at a payments company? Couldn't be, couldn't be done. Of course, like he was by far the best chief financial officer of any other payments company publicly traded or not. And so it was sort of like, and internally we knew it, like we knew he was brilliant. We knew he outworked anyone internally and externally. So it was sort of like, on one hand, the rational sort of voices, the conventional wisdom voices appeared to be telling us we're doing it wrong, but like we know from within we're doing it exactly right.

37:16And so that sort of level of arrogance slash optimism, I think leaked out of the teams that knew it and just sort of laughed within while the world was rolling their eyes. And now the world is sort of on our side too. And, you know, you mentioned the venture and, you know, and I'm curious, Like, you know, you kind of invest today and you raise a bunch of money for a firm from venture folks. How does it feel different interacting with venture guys now versus it did back then? Well, for what it's worth, I haven't raised any venture money for a firm in at least six years now. So my knowledge of venture is at least six years out of date.

37:54I think one of the things that's really happened in the last 20 years, it's sort of Silicon Valley flavor of venture capital. but I think it's true in Europe and in LATAM as well. You have more and more venture capitalists who are entrepreneurs or operators that have transitioned into investing. And so you have a lot of people who have not just kind of a theoretical appreciation, but practical knowledge of what's it like to be in the trenches where they have a higher sort of tolerance for gifted operator without the necessary executive polish, but also have a really good bullshit screen where somebody tells a great story like, yeah, I've seen engineers talk about their work.

38:36You're not one of the best ones because I've met some really good ones in my career. So I feel like venture has improved in its ability to relate to the operators and the entrepreneur founders, at least the ones that I spend time with. and but is the you know at least when i read about it back then i felt that way it was more of like a hey the venture guys are giving us the money like we should listen to them you know like that's like who really knows and now there's a kind of a little bit of a healthy skepticism towards vcs and yeah there's some of that but i feel like i feel like it was not evenly distributed even back then i remember we raised our first round for paypal from nokia ventures who were literally the very last venture fund we pitched out of a hundred who have all passed on what became one of the better venture investor investments of the thought about it we're going to pivot this company and i think i'm sure some founders and we were both very young and very inexperienced that had never had real investors until this very moment and like i don't know what will they do like tell us you're fired give us our money back we'll be like okay tell us more like what should we expect and showed up in this restaurant of halal time like we're pivoting pivot was not yet a word so i don't remember what exactly we used as the descriptive verb but it's like we're changing everything and john maloy who's a an amazing guy and a great supporter both through my career like okay then have a salad and tell us about what's going on they're like okay that was great so and i don't think this was a universally distributed experience but uh i was like okay like these guys are clearly investing in who we are and what we can build versus what we pitched them on the 17 page deck and that i think that's the kind of investor you want to have you definitely do not want to be held to what was on inherently faked up into the right chart that you produced for a series a no one in the right mind should believe that that chart is real did you have uh then only positive experience of vcs back then or no no i've i've had my modest share of less than awesome vc experiences too but 95 of the time I think I have very positive.

41:12The process of figuring out who the person is who is trusting you with their LP capital is really, really important. And I was very lucky with Nokia Ventures, several other investors kind of pretty soon after in PayPal years, and certainly similarly very lucky at early days of a firm where I had the advantage, of course, of being a known quantity, having a little bit more of a choice whose money we took, but also working with people I knew from years past. And in all those cases, I, even in the very, very beginning, when we had very few choices, we would explicitly ask ourselves, what would this relationship feel like if all went to total shit?

41:54Like if we were showing up saying, you know, it's a down round and we're out of ideas and out of money and out of, out of time, would we get blamed or would the you know whiteboards be filled up with ideas of what to do next and we tried very hard to pick the people that would be drawn to the let's solve this together versus well it's your fault which those are the horror stories you hear sort of fired founders and down rounds and etc so then you sold paypal and i guess for the first time you know you made a bunch of money how is that feeling you know how old are you when it happened um 27 26 how was that it wasn't really that monumental i got to move out from an apartment that i took over from one of my earlier failed startups during college to a slightly nicer apartment because I finally could afford the security deposit.

43:03And that was like, oh, this is one of the nice side effects of being wealthy. You can just like pay the security deposit. You don't have to negotiate over how much of it you really need to put up. And so, yeah, I think it was like sort of retail level happiness. Do you think that like you had like basic zero money drive and then you had some money and you kept with zero money drive or, you know? Money is a metric. and as engineers are prone to you want to optimize the metric you want to improve on a metric you sort of want to believe that your metric is going to mostly go up into the right so it's certainly not a a thing that i i don't notice or don't pay attention to but i think that's a sort of a you take stock of like what did this mean and right around the time I started HVF, I was trying to figure out, so what is the motivation?

43:54By then I'd already done both PayPal and slide and was fairly successful in kind of a couple of really lucky, timely venture investments. So I was definitely not primarily motivated by money, which I don't think ever was primarily motivated by, but at that point it was sort of like, I can't in fact just eat gold leaf from now on. It was, it was fine. And, uh, i'd sort of ask myself like so what's the metric like if i'm going to optimize a metric like it can't be i want more dollars because that one it seems kind of piggish but more importantly it also just doesn't seem to have a higher purpose to it and it's a lot easier to mow yourself to roll out of bed if you're have a higher purpose in mind versus just like a little bit more and i decided that what i wanted to work on next was going to maximize the number of human lives i improve which sounds sufficiently big, bad.

44:47And like, that's, that sounds like a really good motivator. And I think if you build enough value that improves significant number of human lives, it takes effort not to benefit in the process, unless you really are kind of a saintly person who insists on handing it all away. And I enjoy philanthropy, but I am not nearly that saintly. And so, I haven't thought through that in a while. and what motivates me to show up to work is certainly the combination of more lives to improve and the fact that the products I work on, I happen to think are the coolest thing in the world and the team I have here is unbelievable.

45:25When you decided to start Slide, how did that happen, I guess? You've already answered your own question. I literally was like, you know, anything but payments, like anything but the freshman act. Yeah, I was like that too. And before Brex, the Pitch UVR, if you remember. and i think by then i told you like hey you're good at a thing like the reason i invested in brexit was basically like the litmus test was these guys no payments like you got like you know nine years old started a payments company became a big thing like clearly you have something that gives you an edge in this payments thing and brazil is a complicated market like somehow you're able to succeed and you're like oh now i'm gonna go build something that's not payments and i think my answer like oh my god like do not go down the road i did it was it's a dumb idea there's nothing there like go build another payments company it's going to be great and afterwards i was like well let's think i'm back he's like no no definitely gonna go vr like good luck but 50 50 odds if they come back and say okay cool we decided to do payments it's a great investment like they're basically made for this i know how the what the movie looks like on my own life and uh you were like all right we're gonna go do this i think the original idea was like not very different from what brex is now just like a slight variant and it's like oh yeah this is a great investment they're obviously gonna do at least as well as the last one yeah i know and you know i think that was a very good advice but did you think that when you were in star's lights was there anything anyone could have told you that would have changed your mind or no probably not right you just got to go experience yeah i think it's the better better men than us have the zen to say i hear your advice and i'm gonna heed it i think the the thing that i was hoping for obviously you did not go down the what may have been the right road you just don't get to find out i i went down the wrong road i think the maybe the right sort of middle ground would have been go down the wrong road learn quickly like it took me a number of years to decide that i am not in fact a media mogul in the making yeah no i think uh maybe because the thing we picked was so complicated that we're like ah this seems like way too hard um and i may i think i can see how entertainment may seem easy but be very hard if that makes sense actually so i had a sort of whole theory as to why entertainment was gonna be great and uh it was like entirely wrong actually i had a conversation with uh a an amazing legendary media executive trying to describe my theories about entertainment and he was sort of like you're so obviously a fish out of like you're you're not a fish and you're not in the water i'm very curious what was your theory now i was trying to explain that like i entertainment is entirely non sort of data driven and not there's you know very few numerate people who are like committed to a-b testing and driving metrics the way we did at paypal and i can bring the sort of breath of fresh mathematical engineering air into for you know building media properties and content and the combination of arrogance and complete unawareness of what entertainment really is about.

48:43It's kind of stunning. So go on and find out for yourself. And looking back, what do you think was the wrong part of it? Probably sort of the high order bits were entertainment is fundamentally about creativity and running entertainment companies is fundamentally about processizing capital allocation towards creatives who see something that you don't see and know something that the world doesn't know yet and can't make it unless you tell them here's a bunch of money go try it and there's some probability of success or failure and a great media founder CEO is basically someone who can resonate on the same wavelengths as these sort of true creative geniuses that will come up with brilliant ideas more than 50 % of the time, but also knows how to guide them towards sort of commercially viable brilliant ideas versus truly sort of art form that may not be monetizable.

49:47And, but that's, that's a gift, but also a skill set. And I had none of that, but I also didn't understand or appreciate that. That's actually what it is. many years ago i talked to bobby kodik who is a legendary of course media executive and i asked him what does it take by then i was kind of figuring out pretty quickly that i was not this was during slide and i sort of met him and i was like you're kind of my here i see myself as a you know as somewhere close to your uh your success one day and sort of asked like what do you do what's it like to be bobby kodik and he said i'm a capital allocator That's the weirdest answer.

50:20It's like, no, I am constantly deciding what needs to get developed and what doesn't. And by then I was already sort of on the glide path towards not succeeding as a media executive founder. But I sort of belatedly understood that the thing that makes him a genius is he knows how to speak and relate to the creative people and yet has a clear understanding of what the financial model behind each of these creative events looks like. This episode of HD in HD is brought to you by a brand that's close to my heart, Brex. When we started Brex, it wasn't just about creating another financial product. It was about solving the real gritty challenges that founders and startups face every day.

51:01Building something from the ground up is hard enough without having to navigate clunky legacy banks with endless fees. That's why Brex is the financial stack that scales with you, no matter where you are in your journey. From maximizing runway to earning yield on your cash, Brex was designed to make every dollar count so you can focus on what really matters, building your dream. So whether you're just getting started or you're ready to take on the next big thing, Brex has your back. Check it out and see why the world's most innovative startups like Anthropics, Scale AI, and Robinhood trust Brex.

51:35You know, talking about capital allocation, right? because you invested a bunch, Mitch, a bunch of money investing and you're kind of an entrepreneur. What do you think, you know, some of the best investors in the world, some of the best entrepreneurs in the world, like what are the traits that you believe that are different between them, right? Like, and maybe, you know, I'm especially interested and the ones that are maybe even in opposition to each other. That's a very deep question.

52:05I feel much more comfortable speaking to entrepreneurs, just given I spent 99 % of my waking hours running this company and very occasionally doing anything else.

52:22Entrepreneurship is fundamentally about some degree of risk-taking, suspended disbelief, grit when inevitably the risk you took doesn't work out initially and kind of have to keep powering through it's a lot about leadership where you have to convince a bunch of people that your bad ideas are going to improve significantly from this point on i think the really great entrepreneurial leaders i admire have this weird balance between being arrogant and extremely humble at the same time where they have total conviction in the thing that they're pursuing but no real ego about whose idea it was or the right way to go towards the mission And so I think that that's sort of the sketch of what I think is a great entrepreneurial prototype looks like.

53:29I think investors have to be a little bit different. There's not as much need to bring sort of 11 out of 10 charisma or ability to motivate a team to follow you potentially completely down the wrong path for a while and then sort of hopefully they don't leave you when you inevitably pivot maybe the one thing that's sort of a juxtaposition where they're not the same they don't have to be the same maybe it's bad that they they could be if they were is entrepreneurs are fundamentally idealists like you have to have a giant idealistic streak you cannot be a cynic if you're a cynic and entrepreneur you will fail that that is a conviction I have I will never move from I think investors who are not cynics end up losing money sometimes they make a lot of money because they have luck and conviction but sometimes they have conviction and no luck and then they lose money and so you it is not just acceptable to be a skeptic you may actually be better as an investor when you're cynical just like we talked about marketing strategies always starting out brilliantly successful and then over time the inefficiency gets squeezed out of the market and doesn't work anymore same is true of public or even private investing you have to constantly check over your shoulder and see the the play you had last year last season still works as an entrepreneur you just want to believe that it's going to work out and you have to be smart and catch on to when when the marketing strategy doesn't work anymore but at the higher level you're just following your vision like you don't care what anybody else thinks otherwise you take too much time try to pivot i think the cost of switching for entrepreneurs is so much higher that you know you're you're better off making it work than uh trying to you know think if it will work or not right um no i think that's a that's a good i i kind of believe that too and it feels that investors being kind of dispassionate and completely analytical is a stronger pro than when you're an entrepreneur, where you kind of need to have some strong belief and kind of keep going.

55:51So let's get to Affirm now. And you talk a lot about credit cards versus Affirm and all that, right? And so maybe let's start there of what do you think about the way the system develops in the u.s that is not ideal why it developed that way um and kind of like maybe what do you think is the more ideal version of it the why is actually shrouded in some degree of mystery like i have theories but i i don't know if i have a crisp answer to why we ended up where we did but i want to hear the theories some of them are too dark um so in the u.s obviously so half the country revolves that is to say they borrow more than they pay by the end of the month it adds to a principal interest compounds into principal with some compounding period and generally speaking if you are in some degree of credit card debt and you're not paying off at least some number that's actually fairly hard to compute your total debt will grow as an exponential function, which I think is very problematic in a handful of ways.

57:06And somewhat unique to the US, right? It feels like this is like the very US problem. That is right. My sort of professional opinion, Brazil, Japan, a couple of other markets that have this kind of installment culture, the conversation then becomes more about the correct risk adjusted rate, which in Brazil has always been very high. And you can debate whether it's too high, maybe it should be lower, maybe the sort of government-sponsored monopolies were too successful in keeping competitors out. But all things kept equal, the first bar I think you have to clear when you're building a lending product is does the borrower understand what they're getting into.

57:49Like if you are coming in to borrow money, the easiest bar to meet is, does the person understand the total cost of credits? And in the US, the system has evolved or devolved to absolutely unequivocal. No. When you swipe your credit card, you have no idea when you're done paying it off. You have no idea if you'll ever pay it off. You don't really have a clue how much it's going to cost you and you don't even know what like the rough expectation like when somebody asks would ask majority of americans when they swipe you know five hundred dollar expensive purchase at filling your favorite retailer like when do you think you'll be done paying this off unscientific guess is whatever the number is from that person that will be profoundly wrong like it wouldn't be close to except for people who are transactors were just you know I'll pay it off at the end of the month.

58:44But majority of the U.S. is not transactors. They're revolvers. And they just compound and compound and compound. And so motivation behind a firm was always this notion of what if we just made credit easy to understand? Like, what if we made it so much simpler? And I certainly took plenty of inspiration. The reason I knew a little bit about Brazilian installment market is because I read up on what it looked like in Brazil, what it looked like in Israel, which is another place where installments is fairly common. Japan. a couple of European economies similarly. And so it seems very simple. And yet U.S.

59:19is uniquely convoluted in its approach to consumer credits. And why do you think you're like, because, you know, Brazil, I agree with you, which, you know, maybe part, we have installments, but then another part of the reason is it's like the interest rates are so high that, you know, it almost becomes, it's kind of culture that you don't default on your credit card, you know? But Europe, they don't even use credit cards that much. What do you think it is about the US versus, for example, somewhere like Europe? This is rapidly going to become a... max's opinions and geopolitical i'll try to keep it tight if you look at relative growth of European economies in US, it's very clear who won.

1:00:00So as much as I trash US economic mores and sort of consumer credit approaches and all of that, you know, you can put on one side of the ledger, you compare even Germany, which is, you know, singlely most successful post-war economy in Europe today, I think it's being pretty rapidly eased by Poland, but compare, you know, any, you know put a pin in a european map and then compared to the u.s u.s just trounces everyone and so how do you explain that and the short answer is u.s borrows against its success like we are actually very very successful consumers of credit at the corporate level for sure and to some degree a consumer level you know we're currently living through a strange time where college education becomes completely irrelevant long before you actually have a chance to pay off the student loans.

1:00:53But like roll back the clock, two generations, and you'd see that borrowing against your future earnings and getting an advanced degree or a professional degree, which I think it actually still holds true today, is a really good idea. It's really expensive to get educated to be a skilled whatever or a software engineer, but then your ability to earn like doubles. And so we did that very successfully in the US for many generations starting mid-century in the 20th century. And so credit is a good thing. You can borrow against your future successes, your future earnings as a company, as a country, as a human.

1:01:31That's worked really well. Germany, consumers barely just starting to use credit because the cultural memory of the 1929 stock market crash where there's tons of margin trading and extreme borrowing by consumers to just jump into the bubbling stock market left so many people completely destitute and not completely similar to the Great Depression in the US. And so there are cultural reasons in sort of each of these countries for how things shaped up, but somehow US recovers from the Great Depression very quickly. And part of it, sort of the success of World War II and things like that, but the industrial growth after the international investments that we made allowed us to outpace the world.

1:02:13And I think you could argue that lack of borrowing in Europe in particular is partially the reason why the countries are so stagnant. It's a beautiful museum, but there's not a whole lot of innovation. You know, like another interesting thing about like the US consumer and your assistant to me is that the idea of having like five or six financial relationships here are like very normal, right? Like you have a credit card from someone and then you have a bank from someone else, a mortgage from someone else, you know, you know, like 5 ,000 banks. It feels like a lot of the world, that's not the case, you know, and you're kind of like, need to like build a relationship with a bank and, you know, FICO, I think is a super special thing.

1:02:57Yeah, that's right. So, which is why I sort of attempted to keep it reasonably tight, But that's for sure. For example, the U.S. is one of the earlier constructors of both positive and negative reporting. So every lender in general is motivated to report consumer and corporate financial performance back to a common pool of data and sort of cooperative competitive relationship with other lenders is supported through these credit reporting agencies that allow better competition among everyone from credit card issuers to auto lenders to mortgage lenders. etc., which in turn lowers the consumer cost of capital or corporate cost of capital and creates more opportunities for people to invest in their future growth, etc.

1:03:44So I think you're right. It is definitely, in my opinion, a huge downside as far as opportunities for growth in economies that do not have thousands of banks. The fact that most countries actually have like five banks to speak of and everything else is like a footnote is a problem. Like you don't compete as much if there's only five of you. If you're 5 ,000 and you're guaranteed to have a somewhat more heated attempt to come after your business. Is there anything else you think is a underrated, underreported part of the U.S. financial system that led to like such a U.S. success? I'm an American by choice.

1:04:22And so I tend to be a little bit overly patriotic in my views of what is great and what deserves criticism in this country. but part of why it's such a destination for for skilled immigration for sure is the entrepreneurial dna of the country like the country itself is a kind of entrepreneurial project and people who have a propensity to start their own business find u.s a much more hospitable environment than just about any other country part of why you know places like france and italy have so much smaller a group of unicorns or even sizable, interesting companies is because there's not that many banks.

1:05:08There's not that much venture capital. There's also not that many entrepreneurs or people who were kind of waking up in the morning saying, I don't want to do this for someone else. I'm going to do it for myself. In part, because the notion of reputation as a professional is built through apprenticeship model, certainly in the places that I mentioned versus the U.S. where you borrow some money, get your degree. If degree stands for something, off you go. Like you can go start your own company or go work somewhere. And it's just a much more

1:05:40entrepreneur-friendly culture. And I think that maybe is the highest order, but actually why U.S. is so successful. I think credit is an enabler function for risk-taking and growth.

1:05:55but the entrepreneurial DNA in the U.S. is maybe the single most valuable asset. And, you know, a firm has millions of customers, right? And tens of millions, tens of millions now, sorry. Tens of millions of customers. And, you know, obviously some debt is good. Too much debt is bad, right? Like, you know, companies go under when they're over levered. If you were to tell the next generation a couple of lessons about what that you should or shouldn't take, what would that be? Very hard to offer a blanket statement of you should do X or Y. The reason credit and debt is such a hard thing to get right, both as a lender and a consumer, is these are fundamentally individual problems and opportunities.

1:06:50a firm is a, we think I'm obviously biased, but we think we are meaningfully better at underwriting than just about anybody else in the industry. The reason we built a company around the notion of no lead fees, no compounding sort of capped interest is because we wanted to force ourselves to be so good at underwriting that there would be no opportunity for swap where if you should typical lender be a credit card or you know different kind of lender normally you have a bunch of tools that are marketed as kind of quasi penalties for bad behavior and late fees a way for you to feel a little bit of a sting when you're late and hopefully you'll you'll get current but if you sort of look one layer deeper what's really going on there these are just ways to take a little bit more money from the borrower and you can sort of put it put inside my moral uh judgment that that's a bad thing what it does to the lender what it does to the to the borrower pisses them off and makes them angry and makes you not want to come back to you as a lender anymore but to the lender it does this weird thing where it allows you to say yeah maybe i don't need to be so good at underwriting like if you're late i'll make a little bit more money if you actually eventually get current because there'll be more interest income and there'll be a little bit of income and late fees and late fees are 100 % gross margin products.

1:08:14So they're wonderful that way. You can just like have a few more. Sometimes you hear credit card CFOs on their earnings calls saying delinquencies are up a little bit, which is a good thing because we'll make more income from late fees. And sort of my eyes pop out of my head. Like, you know, you're like literally telling your underwriting team, it's okay that you're bad. It's fine. We'll make more money that way. The reason a firm has this extremely kind of a purist approach to underwriting is we wanted to give ourselves zero free outs. We wanted to be so good at it that the only way we would make money is when people paid us on time.

1:08:48What that practically means is our underwriting has to be so good that we make the fewest mistakes possible. So it's the bottoms up answer to your question of like, what's the answer for each individual person? A good approximation is if a firm tells you it's okay for you to borrow this much money for this purchase, it is okay. Reason for it is if we thought it would even a little bit not okay, we would not say yes. We wouldn't make money, any money, if you defaulted. Or even if we were delinquent, we would lose money because we lose money every time somebody takes too long to pay us back because we don't price any of that in through things like late fees.

1:09:24I realize that's an extremely self-serving answer. Just use us and then you'll have much fewer problems. But within that answer is the point of view that if every lender adopted this model of kind of extreme purity of make good underwriting decisions, don't rely on late fees, don't rely on sort of gimmicks to, to just pave over mistakes, then I don't think you would have the problem. I don't think you would have the issue of, well, you know, I was allowed to go into too much debt. You're allowed to go into too much debt by lenders that would like you to go into too much debt because then you'll just pay them more.

1:09:59That that was the idealism of our founding. When we started, I sat down with someone who ran a very large card card issuing bank and told them we're going to start a lender that will compete with credit cards and charge no late fees. And the guy laughed at me, like literally like belly lash, like half my profits come from late fees. Like you're nuts. Like, well, I'm going to find out if, if I'm right or wrong, but I'm definitely going to do this because if it works, then, you know, we'll have the best underwriting engine. the world, they said, you know, you're the only one. You're going to be the only one in the industry who does not charge late fees.

1:10:35And that was true for a little while. And after we got relatively big, people started noticing. And now more than half the volume in buy now, pay later is late fee free and increasing. So it's not such a crazy idea. Like over time, I suspect we will see meaningful shift towards these purest models where consumers are deliberately charged the least necessary amount of money to price in the risk of like true accidents. Like you don't know you'll lose your job tomorrow. So that's a thing that you can't control. You essentially, the reason you price in any potential for loss is that whatever that number is, the smallest number of that is what you should be pricing credit for.

1:11:19Okay, so if I were to take the, maybe the, if I were to like put myself in the shoes of the big bank who would have argued against it. Maybe the two arguments they would have made, I'm curious to see your thoughts on this, would be one is increasing my interest or late fees allows me to underwrite more customers and give access to more people to credit where for the longest time, the American financial system, if you were kind of subprime, you couldn't get any credit and now you kind of can and you kind of need to make a business model that works for that. And two is deterrence. I'm curious, like, your view on both.

1:11:55So on the former, I would argue that it's not an empty argument, but it makes just as much sense without the sort of gotchas and hidden fees. So I have no problem with someone saying the only way I can price in the risk of a job loss or a medical leave or something like that is by increasing my interest rates. I think that's actually very rational. And you can sort of have eye-popping interest rates like 40 plus percent in Brazil. Usury caps in the US. Yeah. So you have some legal caps that there's no federal usury cap, which I would love to see one, but not sure that's a thing in the nearest future.

1:12:36But we do have things like Military Lending Act, 36 % cap and things like that. And so I think increased rate of interest as means of pricing in the unpredictable loss, essentially insurance policy on a per cohort of credit quality is very reasonable. And you can decide as a lender that that will be your specialty and you'll find the efficient frontier for that cost. Maybe you choose not to go into those cohorts because you don't feel like you want to charge those kind of rates, but that becomes an exercise in sort of rational business model construction. The second you say, I'm going to offer you a loan that looks like zero, but there'll be an asterisk and a fine print will say, if you're late by a little bit, interest rate is going to pop up to 36 % and compound retroactively.

1:13:20And that's how I'm going to afford to lend money to other people who would otherwise not get access to credit. You're lying to everyone. You're lying to yourself. You're lying to your customers. You're lying to people who couldn't afford credits. It's just a disaster of this model. And fortunately, that particular thing called deferred interest is slowly but dying out. and but that's sort of the the rational answer to how do you extend credit to more people you can raise interest and so long as you're clear about the cost of credit there will be competition there'll be someone who comes in and says well you know normally i can do better i will offer you a slightly lower rate i think that that's a totally reasonable approach the the turn part is actually like a total red herring like it's completely fake so it's very easy to actually to think through.

1:14:06So there's essentially three kinds of people who don't pay you back. So first of all, vast majority of people do not like to be late, do not want to be late, are late for like completely tractable, like silly reasons. So like 95 % of people who are late are late because they're sloppy. They forgot to set up auto pay, their bank account number changes. And so the auto pay drawn along or works. I was in this category. I found out my FICO tank, I had this old Wells card, you also get charged a bunch of late fees. Yes. Even though you were perfectly independently wealthy. Yes. And so the right approach, of course, would be to send you a bunch of people saying, hey, your auto draw failed.

1:14:45Go do something like you have 10 days, 20 days, 100 days to go fix your auto pay. There'll be no cost. Just go get current. And so that group is by far the largest group. In the industry, the slang is sloppy payers and they inevitably cure, to use another industry's line. I think they make auto pay hard because of that. Have you ever wondered why the sort of deferred interest gimmick, which is where it's like equal pay until the last payment. And if you're not completely at zero, it compounds retroactively from the time. Have you ever wondered why that last payment, if you just choose the minimum payment, does not land you at zero, but like a few dollars?

1:15:27I never read the math. It's just there is the most money to be made if the retroactive compounding takes place. I'm not accusing anyone. I'm just saying. So I think that that part speaks to results. So anyway, so 95 % of people who are late are sloppy payers and they cure happily. 95? That's my estimate. I don't remember, don't know right now what it is for us, but all things kept equal people who, if you underwrote them properly, obviously if you handed out loans to anybody who asked, that number would go down. But if you did a proper, reasonable attempt at underwriting, 90 plus percent of the people who are late will absolutely cure.

1:16:02after that you have two other groups that are much smaller one group that says i never intended to pay you at all and like it's not really fraud because they use their own name they borrow money for themselves but like in the back of their head or in the front of their head they're like i am not paying this back what's gonna happen my fico score is already trash i don't really care it's free money i'm not gonna pay you back the one thing they're not gonna do is they're not gonna pay you your late fees or any other kind of fees they had no intention of paying you back. So the whole sort of charade of like, oh, that's a deterrent.

1:16:30Like it's not a deterrent. They don't have any intention of paying you back to begin with. So like put that group aside, they're basically criminals. No one sues them because the amount of money is too small, but they're not paying you back. The last group are people that actually sort of the canonical example of bad thing happens to a good person. Someone who borrowed money, they had a job, everything was fine. And they had every intent of paying you back. They set up auto pay. It all worked and then an accident, a job loss, a medical emergency or something. And now they're like in real tight spot.

1:17:01They cannot pay you back. They cannot pay you back. So telling them, aha, but there's now a late fee and more compounding and all these things like they still cannot pay you back, but they really want to pay you back. They're really keen on making good. They hate the idea of having their FICO tank. They really don't want to be in a place where they're embarrassed to explain to themselves or their spouse or whoever matters to them why they're getting collection phone calls. So telling them, hey, there are no late fees, just get current as soon as possible, prioritizes a firm, in this case, to the very top of their payment stack.

1:17:35Inevitably, if you have a bad thing happen to you, a firm is not the only place where you're late. You're late on more or less every bill you have. At this point, you're deciding who gets that payment. More often than not, the person who gets that payment is the one lender that's treating you like a human being versus the one that says, ah, cool. One of the more important findings in the last hundred years of behavioral economics is that humans are not homo economicus. They're entirely emotional species. You do not think, I'm going to call this bank and negotiate to reduce my late fees. Like the thing that overwhelmed you when you found out about your broken auto pay, you're like, these bastards that erect my credit score.

1:18:14How dare these people take advantage of the fact that like a technical error screwed up this trivial thing that doesn't really mean anything to me. At no time, I expect you thought through, I paid$30 in late fees. That's not that much money. I don't care. You're angry. So for the$30 moment, whatever bill that wrecked your FICO, fairly confident. You're like, the day I can get rid of that lender or source of bill, whatever I will, because these guys screwed me. Yeah, that is absolutely true. I definitely, and I think it was even worse now remembering because I think they needed me to like call to kind of resolve it.

1:18:52But that part is like, we're milking you for all you got. Like at this point, it needs to be faxed and triplicate. Yeah, or something like that. And I'm like, I don't have time. I'm back to back. I don't want to call my bank and be in the line for 30 minutes. It's like, well, then some more late fees. The right way to think about a firm as a business, if you look at like lending companies in general, right? Like it's not been loved by the markets, I guess. and obviously EMPL as a category and the firm as well seems much better business than traditional lending businesses as well. I guess I would love for you to explain it that the way that I have it in my head is that it's like you know obviously amazing underwriting model you know fair to the customer brand loyalty but also it feels that in a lot of lending businesses a lot of the profit gets eaten by the tack and then you know with a firm it's kind of like a tack-free personal loan.

1:19:45pretty close. The CAC is a little bit worse than free in a sense that the right way to run a lending business is to have a hopefully predictable and highly manageable, but non-zero loss rate. Because at any given time, your underwriting models are not perfect. You're not clairvoyant. So you don't know, you certainly can't see the future. So whenever you lend money to someone who loses their job, never gets it back and will in fact default and not cure, that's a net adjusted charge off NACO. And yet you don't want to decline everyone who might lose their job tomorrow. I guess you'll probably decline everyone or certainly decline too many people.

1:20:25And so the CAC of the NPL model is at all times is at least the potential for loss that's embedded in every loan. You're right. But the fact that it is distributed at the point of sale is an extremely powerful idea. The marketing of credit cards in the late 80s, early 90s, where every doorstep in America was blanketed by literally a piece of plastic that had your name on it. It was a credit card you can just start using. That's a cool sounding mail drop approach, but I'm sure you can imagine the conversion rate on that. Yeah, I think one of the, I would say, dirty secrets of industry that I know is that if you have a lending business and it's known as a lending business as your multiple suck.

1:21:08But if you put a lending business inside like a marketplace or like something else, then your profits get the value of the same multiple. I don't know if it's a secret if you know it, but I'm not even sure it's really all that true. I think at some level, if majority of your revenue comes from lending, you're a lending business. I think the real question within these multiple conversations is always what are we betting on and for us at least the bet as we stated to the market and as i think our investors judge us we're the right balance between being completely obsessed with credit underwriting and kind of first principles approach to risk management and very growth focused without ever compromising credit.

1:22:05The reason lending businesses get a bad rep is because more often than not, they end up at some point saying credit is priority two, growth is priority one. And the easiest way to grow a lending business is you just, if we're a few more people and for a while it looks great, and then suddenly you have a macroeconomic bump. And what's cyclicality of it? The cyclicality, again, like it's a good macro sort of a thing to say, well, you know, the cycles, like what really happens in a cycle? What happens in a cycle is if you were growth-minded, growth-focused more than credit management-focused, you will inevitably look back and say, oh my God, as of today, the macroeconomic reality has changed in a fairly dramatic way.

1:22:50And there's no thing I can do to fix all the loans I made six months ago, 12 months ago that are still paying off. The repayment rate drops, your growth slows down because you now know the next batch of loans is going to be bad. And so you suddenly have a bad back book that's bleeding money much more than you expected and much smaller front book that you are smart enough not to create. And so you have these sort of natural waves of collapse where the back book eats the front book and bad things happen. And the reason BNPL enjoys as good a multiple as we do, and a firm in particular, we have always been risk management minded very openly.

1:23:28So we've routinely said we will grow as fast as our credit posture will allow us to. It so happens that the secular trends of people switching away from credit cards towards some more fair, more transparent lending models has fueled our growth and continues to fuel it really well. But we're still like every shareholder letter I write somewhere in there, there's a line that sounds like credit is job number one at a firm. And it always has been, and it's always going to be. And still, the back book front book debate will continue raging, but the weighted half-life of a firm loan is four and a half months.

1:24:02And so whatever mistakes we made in the past, four and a half months in, it's not as much a problem as it would have been. So the short-term nature of the book, the obsession was credit, the fact that it is distributed, the point of sale makes us different enough where we're quite a bit different from sort of the canonical marketplace lenders etc who in fact do enjoy less exciting multiples um we're getting to the point where we got to talk ai and crypto uh do you believe in a transformer based uh underwriting models? I believe in math, kind of a full stop. And so, well, I'll give a mathematical answer since I believe in math, as I just claimed.

1:24:50So the transformer-based underwriting model or transformer-based model writ large is basically a universal function predictor. In fact, machine learning as an industry or as a species is all about creating more and more elaborately precise universal function approaches. So at least in theory, if you have a great sort of classical machine learning model, you should be able to find a great predictor of that model with an LLM-like approach. The question is, as always, the underwriting model problem isn't about classifying things into sort of left and right. And then it's not even like predicting the next token.

1:25:32It's actually finding that marginal yes or no and sorting risk at the limit. Like people that are at the top of the credit heap, you can sort them any way you like. The default rates are going to be relatively predictable. Once you get to the sort of risk relative to the price you're willing to charge, you're asking the question, so of these thousand people that have just applied for credit, what's the one I'm most excited about taking a risk with and what's the one I'm least excited to take a risk with. So this marginal optimization, can you get to an LLM that does that marginal optimization better than a classical sorting mechanism?

1:26:05It is definitely not impossible. I have not seen one that does that at any kind of scale, but I'm certainly very excited to find out. And do you think that kind of fair lending stuff prevents it from happening or no? it's definitely a very important consideration i think there's not a an inherent transformer-based model bad because fair lending but the set of questions you have to answer around things like explainability and repeatability in particular is different and very important i guess you know lms we all know are incapable by design of generating the same set of tokens on a recurrent run unless you sort of really dump down the model and in the world of fair lending testing for example you better be able to rerun the model and get the same result otherwise you know why did you say no this time i don't know it's transformers yeah exactly so any any regulatory regime that examines transformer based underwriting model will have to convince themselves that these models are sufficiently explainable to a borrower that they don't have a reason to sue or complain about a lender that can't really explain why the answer is yes or no.

1:27:26So there's a variety of really, really interesting questions that I think are all actually solvable, but they're definitely not easy. Yeah, I heard an argument, I don't know what to think about it, that the fact that we don't have fair lending around the world where we can use Transformers some of these that will kind of evolve the underwriting models faster, you know, and better compared to the US. So I think that's like a really good theory. But transformers have been around a lot longer. Anyone in machine learning read the attention is all you need was like, whoa, that's like a totally different approach.

1:28:00At PayPal, we went through a whole year long exploration of neural networks trying to convince ourselves that we could fight fraud and predict losses by using all kinds of earlier generation neural networks. But this was a thing. We thought we would find an edge there and we didn't. But we all read the same papers and any time, you know, random forests were like a big deal during the PayPal years. And we were certainly, I think the first company to use that approach in ML. And kind of that's the beginning of balance here, I guess, came from all those efforts, I guess, right? Yeah. But the point is people in machine learning who certainly take it as a serious discipline, I don't think we're taken entirely by surprise when attention mechanism came out.

1:28:43It was just like another really clever idea in the long procession of it. It was an iterative evolution of that. And not to take away from the sort of the importance of that discovery, but more than anything, attention was your removal of complexity, like the fundamental difference between the prior approaches to what we now call what powers LLMs was sort of a simplification, not a new layer of complexity. And what do you think is going to be the biggest impact in FinTech and financial services? Kind of like LLMs, like where are the areas who believe that, you know, it will most impact it? You can only speak for this company in terms of what's actually happening.

1:29:24I think the overall efficiency gains just sort of all the predictable places like CodeGen and sort of enterprise tooling and all that is really powerful and we're still very early in that journey i think the but the most important thing there is just retraining people to default to ai assisted approach like even somebody sort of completely obsessed with all the latest and greatest technology i default to behaviors that i've grown up with as a software engineer as a product designer sort of a researcher of all things interesting on the web and like wait a second like why am i doing the work i should ask you know chat gpc or gemini or you know whatever i have open to go perform a task for me and i think it'll be a few more years before we really flip the workforce of the white collar dot workers to sort of say well first things first i'm going to get my agent to go get ready and then i'll make some important decisions so that that's sort of it's widely like a little wider than fintech other thing that we just talked about already i do think there's an enormous amount of opportunity in borrowing ideas from the lm world and applying them to the models that we have to build with the necessity of examinability and repeatability explainability like all those are fair lending tests aren't going to disappear which is generally speaking a good thing And so still with that, you can build new models that help you with things like fraud.

1:30:55And one sort of a good thought experiment is credit is complicated and very, very tightly regulated. So you have to be extra careful as you sort of explore there. But fraud is less regulated. And figuring out when a user is defrauding the system is actually more of a binary stakes thing. So you don't have this marginal optimization thing. you're trying to figure out, is there enough information to believe that this person's intent is actually not pure? They're in that little 2 % of the population who never had any intent to pay you back. So there we are already using attention-based models to pretty great degree of success.

1:31:30And so that's kind of a fun internal trend. And I'm sure many other fintechs are right on it as well. And then in our world, we use attention-based models, transfer-based models to optimize pieces of our user interface. A huge part of what we do isn't just we made an underwriting decision, here's a loan, go crazy. It's the here's a loan, let us help you close the transaction. And there's a bunch of user choice there. You have to decide the term length. You have to decide whether you like the interest rate you were offered, et cetera. So presenting that in a way that the borrower can understand very quickly and make a concerted decision, reducing noise, giving them information about exactly what the cost of the loan will be, like the fact that we're so obsessed with transparency, you can do a lot with eliminating excessive pixels when you're producing that product for them.

1:32:24And so we have a ton of investment in that area, which is much more about optimizing the bits of user experience as the consumer goes through our funnel and completes the transaction at a retailer. That's probably the area of kind of a greatest ROI in transformer-based work for us. And so I think others must be doing something similar, but we definitely feel like we have a huge edge in that world. What about, let's talk crypto a little bit. Obviously, it feels that Genius Act is like a big thing or inflection point in the industry. Since your early cryptography days, you know, and that - Crypto used to mean something else.

1:33:03Yeah, exactly. You know, probably been following and interested for a long time, right? Like, what do you think this moment now where I guess it's somewhat getting regulated and legalized is going to change in the industry? I think it's great. I think for a very long time,

1:33:25cryptocurrencies felt to me like a hammer looking for nails quite desperately. I think the latest, and so there are two problems. One is kind of this really neat thing that only true zealots were excited about. And you can sort of put aside people who thought of it as a great long-term investment. Obviously, Gary Wright and people who sort of bought Bitcoin at 64 cents a piece and sat on it for the last 15 years have done very well for themselves. But I think majority of us were probably kind of like, huh, I don't know why I would need this thing other than it's a cool speculation. but past that it was always sort of like huh it's interesting like smart contracts and sort of all these interesting ideas were always a little bit fringier than like consumer finance corporate finance had a reason to to be excited about plus the sort of ever-present overhang of well what if u.s government one day says it's illegal illegal this way but not that way and so the the regulation and legislation that's shaping cryptocurrency in the US is a great idea, almost independent of what the law actually says.

1:34:35It doesn't matter precisely what the contours of the possible, impossible, legal, illegal look like. Just injecting certainty into the market allows capital allocators to put more effort behind it, just legitimizes it, legitimizes, but also just makes the decision making around how much time and effort to spend developing in that domain rational. Like I would love to do something, except I don't know if it might be made illegal tomorrow. So maybe I won't. It's like a thing that people, you know, entrepreneurs certainly have thought. Anyway, so I think it's very important and glad it's happening.

1:35:07And we're now starting to see in particular in sort of a stable coin world, real kind of a obviously good business reasons to adopt these technologies. And so like instantaneous transfers across border. And the message, there's always sort of subtle question around like what exactly value you're adding? Where is that arc of movement where stablecoin is so much better? And these sort of canonical answers like, well, you know, so ECH is great, but it takes 40s or, you know, an average two and a half days these days, I'm sure. And it's reversible and it's annoying. Well, except reversible is actually quite important.

1:35:46things that are really broken frequently enough need the time and the flexibility to fix and so you could argue that stablecoin transfers are perfect and could never be broken because of the public nature of the ledger and so you don't need reversibility but you do need things like refunds and correcting for erroneous instructions and human error things like that so stablecoins still make a great building block for protocol that allows things like partial refunds etc but But there are definitely applications now with stablecoins in particular. They also, stablecoins reconcile the natural tension between U.S.

1:36:22Mint and cryptocurrencies. You don't have the problem of what if the U.S. government decides that it's not okay. By paying it to USD, you're inherently making it much more understandable and easier for regulators to care about. So I think all things kept equal, we are, in my opinion, entering the moment where a lot of things are suddenly making sense and could be useful and applicable. I am fundamentally driven by what does this help me build? I think of cryptocurrencies and distributed ledgers as a really interesting building block, which for a long time I sort of stared at from afar going like, sure, but if my goal is to improve lives of millions of people, how does this help?

1:37:07like people who are hoarding Bitcoin and sitting on their enormous gains from 2008, they're not really spending it. Like that's not a thing. And with them, stable coins are maybe spendable. And like they're apparently now sort of really picking up the spending pace, but it's still like nothing relative to kind of more classical ways of spending money. And so it's not yet a thing that you and I just have in our wallets casual. well, I just got my USD stablecoins here. I'm going to buy some coffee with it. Like not a thing yet. And so I think we're about to enter a timeline where you can imagine building real consumer or corporation business-facing products that are powered by stablecoins.

1:37:55And so in that sense, I'm meta-excited. I heard this argument there, which I thought was very interesting, that the biggest kind of implication of stablecoins is that banking went from local to global, meaning like you can now build a product in which if you live in a different country and you want to have access to the US and dollar financial system, that now you can. And if you're building something on top of stable coins, you can kind of like be kind of global by default, you know, especially for like dollarized economies, which are really hard. You could technically do it before, but it was really hard.

1:38:29Yeah, and I'm actually, I've seen really interesting LATAM-based companies that are allowing various citizens of outside of the US to essentially move a meaningful percentage of their personal economy into dollars, which in some regimes is illegal, but stablecoins enabled fairly elegantly and in other parts of the world is legal, but kind of actually hard to impractical. And so I think that is a great argument. I agree that it's true. I suspect the sort of practical reality is the entrepreneurs building those products for those consumers no longer have to live in the U.S. They can be local to whatever market they're trying to address and therefore have a better sort of sense for what that customer actually needs and wants or how to speak to them, how to market to them.

1:39:28I think the plenty of people who tried to build great financial services, even dollar financial services for Mexicans in the U S or for Filipinos in the U S and as great as they may be, I think the cultural divides are a thing. And so you either have to go live in the country for a very long time to fully internalize what's going on, or you're making a bunch of educated guesses or hiring people who understand it, but are not actually sort of founder CEOs. And so I think the founder, CEO, entrepreneur, local-minded, sort of fintech, maybe next Enrique does not have to leave Brazil and just like build a great Brex for Brazil right there.

1:40:11I think that's definitely true. And, you know, nothing better for our dominance with the dollar. It's not lost in me that we are, not we, but... We as a country. We as a country are once again re-infiltrating the world currencies with the sort of, of course you can hold USD, just got to get yourself into the right stablecoin. And you believe in the tokenization part of the story of like, you know, you do a bunch of securitizations. And, you know, so you're deep into that process. And, you know, we've been talking for a long time about this idea of tokenizing more assets and real world assets. And, you know, what do you think of that?

1:40:49So we're not quite there from the regulatory legislative framework. What's the bottleneck? Actually, I'm not sure. I suspect we just need to pass more laws and if we could just reopen the government, that'd be great. Actually, Congress is functioning despite lack of government functions elsewhere, but I don't think they're very busy with tokenization-related bills. But I do think it's coming. I think it's, generally speaking, a great thing. Probably one or two steps too far from what's at the absolute cutting edge of those ideas to have a really strong point of view, but I don't see any reason why it isn't going to happen.

1:41:32And the most interesting consequence, I think, is kind of another round of inclusiveness for people who are not normally participating in investing. One other thing, sort of to loop back to something that we talked about, the U.S. has frequently been maligned for lack of access to investable securities by kind of the rank and file. And there's some good reasons for why these rules existed at some point in the past, but like in practice, they're just like, we think people are stupid, they won't get it. And so we should just like save them from themselves. And it's probably true that it's like, you know, I'm not advocating for financial services amarchy here, but people are not stupid.

1:42:18And with the emergence of AI, they're definitely much smarter on average than they were five years ago. And so we may eventually get to some deregulation or reduction of qualifications or burden or tests to pass on the classical way of getting access to investable securities. I mean, if we think they're smart enough to bet on prediction markets, you know, what's investing in startups, I guess, right? Well, if prediction markets are effectively investing in startups, in many ways, you can now synthetically invest in startups by betting on their success in prediction markets. Although I think that's still illegal in the US.

1:42:56Maybe, maybe. So Max, just as a final question, right? Going back a little bit to a firm, but if you, you know, with AI and crypto and all these things, and if you look at a firm over the next 10 years, it's going to be a fun ride. Like, what do you think is going to be the same as kind of where we are today? And what do you think is what's going to be probably different? I think as much as people sort of love to poke out, well, the growth rates and this industry has been so strong. How long can it last? There's a secular trend of shifting from revolving credit to non-revolving credit in the US.

1:43:39Like we didn't invent the idea of installments. We didn't package it in a way that's, I think, really consumable and better for consumers, more transparent, lower cost, et cetera. But we had best to kind of push the ball that was primed to start rolling down the hill. And it's not rolling pretty quickly. You know, a firm grew 43 % quarter or year over year last quarter. And so for a company that did$37-ish billion in loan volume in the fiscal year, still compounding at 40 plus percent is pretty strong. Really impressive. Yeah. And so, but again, I'd love to take credit. This is all my marketing prowess, convincing everybody, passionately speaking about transparency and lending.

1:44:22It is as much or significantly more, in fact, a secular trend that consumers are apparently embracing this way of borrowing money. than, you know, the older ways. And so just for context, a firm is, you know, on the order of $35 billion in compounding,$37 billion compounding at 40%. I have no idea when it slows down or speeds up for that matter, but I do know that the U.S. consumer credit card debt is$1.2 trillion. And so there's a fair amount of road before we start casting our eyes for that. What else might we do here? And growing, I guess, right? And growing. And then it fluctuates with sort of up and down, but it's not coming down a lot.

1:45:03And US is growthful as a society because we are, generally speaking, pretty good at borrowing money. If you look at the aggregate statistics, we borrow trillions of dollars. As consumers, we borrow a trillion dollars plus or minus here and there. And yet we default in like a 5%, 6 % range. Affirm defaults are even lower than that. And that's maybe a testament to our strength and underwriting. But the chances of writ large as a society, we're actually quite good at managing our credit and debt. And so that growth is not in small part, our ability to create value by borrowing. And I think for a while, we'll do many things.

1:45:48But in your question of the same versus different, we'll do a lot of the same just because there's so much to be had in terms of consumer demand and merchant demand on the other side. We primarily lend money or exclusively lend money when somebody's buying a thing. And it's a unique way to add value to both the borrower and the seller. That said, 10 years from now, we better have a few other products built that don't look too much like what we have today. I've learned the hard way that whenever you announce a product before it ships, you should immediately multiply the timeline to shipping that you have in your head by two.

1:46:26Yeah, makes sense. Max, super thank you for doing this with me. And thank you also for betting on us early on. I think we just got to the US. You're probably the first person to, you know, really put a real check and trust behind us. So thank you for, we probably wouldn't be here without you. So appreciate it. Works out for all of us. Thanks to our friends at Atomic Growth for helping with production and distribution.

1:46:54Thank you.