Should You Let an AI Agent Spend Your Money? (Max Levchin)

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1:07Rich Habits:This episode is brought to you by VCX, the public ticker for private tech. My name is Austin Hankwitz, and I'm joined by my co-host, Robert Croak, and this episode is going to be a little different. Instead of running through our normal three headlines and three radar points, we're going to be having a very special conversation with the CEO of Affirm, Max Levchin. Affirm recently reported their earnings results. The stock is up 70 % throughout the months of April and May. So what better time to chat with the CEO of a$25 billion company than after a ton of cool announcements. So Robert, let's jump into our conversation with Max Levchin.

1:45Rich Habits:Max, thanks again so much for joining us. Great to be here again. So you all just wrapped up your 2026 investor forum and you're coming off your 10th straight quarter of 30 % or higher GMB growth. Most people listening right now still file a firm under the buy now pay later acronym. If that's the wrong box, what's the right one? What is a firm actually trying to become? I think I'm done fighting the BNPL moniker for a while. I was raging against, you know, don't put me in a box and I'm over that. What's important to understand is BNPL, or at least a firm within that category is fundamentally a mind shift or a vibe shift, as the kids say these days.

2:25You can borrow money. It's a good use of personal capital to stretch your money out into the future. And there's the right way to do it and the wrong way to do it. And we represent, certainly to our biased opinion, the right way to do it. We don't charge late fees. We don't do deferred interest, all the sort of things that are kind of scary because they really are. We don't do. We are super transparent. We do everything simple interest. We pre-communicate, pre-price everything. We reward you for paying early, all the things that a firm stands for. So if that's called BNPL, so be it. We are unique.

2:55We're still the only company in the industry that does all these things in a very specific, very deliberate way that is so profoundly pro-consumer. And in that sense, we are in a box of our own, and I'm quite happy being there.

3:05Rich Habits:Yeah, maybe talk more about what makes you all so unique. I mean, just for example, right? Like, walk me through a transaction a firm did maybe six months ago that makes the next one cheaper or more accurate? Yeah. So as you guys know, every transaction that is powered by a firm is underwritten individually in the moment of transaction. So we take all the data that's available about you as a consumer, as a shopper, as a borrower, and the thing that you're buying, drop it all into a giant AI model, and it tells us, here's the price of risk. Here is the cost of lending you this money based on everything we know about you.

3:41So if six months ago you came in, we never met you before, we can infer a little bit of value based on your credit report data, which we pull based on kind of what we think we know about the kind of thing you're buying. There's some very interesting fraud related data. If you're buying something, it could be easily fenced in a street corner. There's a little bit of an increase in risk. If you're buying something that is essentially a capital asset, that's a lower risk buying a mattress. We're easily convinced that's probably something going to sleep on as opposed to try to sell it to the highest bidder, et cetera.

4:10So the models take all the data in and give us a price, and we show it to you and say, hey, this is the cost of credit. And a lot of times, the retailer or sometimes the manufacturer will pay your cost of credit or pay your interest for you, so it's a 0 % loan. But in either case, there's some associated cost that the model tries to predict. And we're very, very good at that. We've been at it for 15 years. Models are very precise. The next time you come around, assuming you have paid your bills from a firm on time or early, which we love, we'll say, hey, you know what? We know more about you now.

4:37It's not just the publicly available credit data. It's not just what you're buying. It's also the fact that we've seen you in action. The cost of risk will go down and we'll pass it right on to you and your next transaction will be cheaper. And it goes on and on. Models are built to take that into account every single time. And that's why it's so powerful to underwrite every one of these transactions in real time.

4:57Rich Habits:And when you say pass that on to the consumer, how does that work? Just ends up being lower interest. Got it. That's really cool. I appreciate you walking through that. Max, two weeks ago, you announced firm is going into Google search, AI mode and the Gemini app via Google Pay. For folks who haven't internalized what agentic commerce means yet, paint the picture for them. Because from a year from now, someone asked Gemini to plan a trip to Europe. What does the checkout experience actually look like and where does the firm sit in it? It's a great question. And the future is super interesting and exciting.

5:30And it's fun to try to participate in both predicting and building it. This is already happening. This isn't quite figment of someone's imagination. So if you go into Gemini today and you type in, hey, I'm going to Europe. Help me figure out how to get there. Here's my budget. I want to be able to fly a family of four, this city, this city, et cetera, et cetera. Gemini will do a pretty good job saying, all right, I can see some information about airlines. I can help you shop for seats, et cetera. So that's already happening. The next thing that's going to start happening more and more, and it's already beginning, and we are an excited part of this, is you can tell Gemini or your favorite bot or your favorite LLM, hey, I actually want to close the transaction now.

6:08I like the price. I like what I'm seeing. How can I afford this? And it has been our job for 15 years to answer the question, how can I afford this in the most transparent, sensible, lowest cost possible way? And so what we've built are these plugins that go into LLMs and pipe up right as you ask this question, hey, how do I pay for this thing? And obviously, we're not the only ones. There'll be plenty of choices. But the thing we're so excited about is think in the past, the thing that I love to rage against this idea of, you know, zero with a tiny asterisk, don't read the fine print. You're getting screwed.

6:38You don't know how. Doesn't matter. Like that's the business model of old. The business model of a firm is you are not going to get screwed. We take it as our responsibility to you to give you the exact price and super transparent language. One of our core values is no fine print. It's always been hard to compete against those who have a somewhat less scrupulous approach because the fine print is really fine. You can't read it. I can rage against the fine print all I like, but the consumer who's got two kids to travel to Europe with is not actually going to have the time to be like, wait a second, I got to read the fine print.

7:07So they still get trapped. They still get into these awful transactions that later on they come to regret, but too late. What's amazing about chatbots, amazing about AI, is each one of these bots has a PhD in consumer finance. They are looking out for you every single moment. And so as you say, hey, how can I afford this thing? A firm will pipe up with, hey, here is a pay in six plan. Here's the exact cost of interest. If you prepaid, the interest is going to come out. Or here's a trip by an airline that we have a partnership with. They will pay your interest for you. So it's a true no interest loan.

7:39Doesn't matter if you're a couple of days late. Doesn't matter if you forgot a payment. We're not going to flip on you and charge you a bunch of interest you didn't expect like some of the other characters that I enjoy raging against. And so that combination of extreme consumer convenience, transparency, and AI being the world's best watch of these fine print gotchas, we think is just going to not only do great things for our business, but fundamentally change the bar, raise the bar on financial products. Every single person asking their AI to help them buy something, afford something, plan a financial decision is going to get a better outcome because these things are never going to be fooled.

8:16They're capable of doing advanced math right there in front of you and boiling it down for you in a single line. This one has no fees. It's a pretty good thing. Cool. They're not going to make a decision for you, but they're going to make your decision most informed decision possible.

8:28Rich Habits:You mentioned competition. You're launching alongside Klarna in the same Google integration. From a retail investor's standpoint, why doesn't this become a race to zero where the AI agent just picks the cheapest option every time? Spell out what a firm's moat is in this agent-mediated world, because I just want them to really understand, because it does seem like a challenge for you guys. But I love the fact that you have all this transparency. So walk our listeners through that. A challenge we are embracing wholeheartedly. So I think there are two fundamental things that make us different. Maybe three.

9:00I'll start with two, and then I'll add one more. Number one, much to my chagrin, by the way, this advantage I'll give away. Anyone who wants it is welcome to it. So stop charging late fees. stop doing compounding interest, stop having transaction fees, all the fees that the industry loves to throw in. We don't do any of that. And for years, I feel like we just never quite got our fair share of love and recognition for those who use us know exactly what we stand for. In fact, our best customers are the ones that have been late by a day or two. I used to love listening in on phone calls like, hey, I'm late by a day or two.

9:31Can I just just be current? You'll be okay. Like, what's the late fee? There is no late fee like, oh, my God, that is so cool. Like, I've heard that that is so cool so many times. It's just, it's the happiest sound. We are still largely the only player that does this at any kind of scale. And so right now, as these AIs compare all these providers to each other, we tend to stand out in a good way of like, hey, this is the one with no fees. So I will gladly share that podium with anyone who wants to be on it. But for now, we are unique. Maybe the more permanent or at least harder to dismantle advantage, we've been at this idea for 15 years, which also means we've gone to literally hundreds of thousands of retailers and struck special pricing contracts with them, where they will pay your interest either fully or partially, sometimes during a promotional period, sometimes during every day of the year.

10:19But the same level of transparency, the same level of no fees, no gotchas, zero means zero, all the stuff that we just bring from ourselves, we pass on or we invite retailers and brands and manufacturers to participate in. So when you go into a chatbot and you're buying a Samsung TV on a 0 % transaction, you know it's zero because it's a firm making the promise. But it's also unique. You can try to buy it with any other payment provider, BNPL or otherwise. You're going to find yourself paying interest. You're going to find yourself also wondering if there's going to be any fees. But even without it, you're going to find it a little bit more expensive.

10:53So quite happy to compete on that facet of price because we do have these contracts. And they take a long time to negotiate. They take a long time to execute very carefully because retailers don't have infinite margins. So each time they subsidize this sort of a 0 % loan, they have to believe it's a consumer who's only going to buy when they are seeing this particular promotion powered by us. And we have an incredible amount of experience doing it, but also huge systems of software that we've built over the years to provide visibility and transparency to the retailers to make sure that they can run these ad campaigns responsibly, thoughtfully, and get the most for their money here.

11:30So that's a huge, very, very sophisticated advantage that we bring to bear that we've used very successfully over the years outside of AI. We think it's going to be multiplicative within AI. And then just one last bit since the two and a half, the other thing we've done for the last 15 years is we've gotten better and better at underwriting. And so at any given moment when we are side by side with any one of our competitors, especially for things like six month transactions or 12 month transactions or something that's actually quite long term and has real risk to it. You know, as people in credit say 12 opportunities to default, 18 opportunities to default.

12:03It's a bad joke, but it's not completely wrong. We're very good at sizing that risk and pricing it correctly. And so typically we approve more people while having lower losses. And so that, again, creates a moat or an opportunity for us to outperform our competitors. So we love competing. I'm generally sort of a competitive person, but I feel very good competing in a space where the judge has a PhD in consumer finance.

12:26Rich Habits:Austin, before we ask Max our next question, support for the show comes from VCX, the public ticker for private tech. For generations, American companies have moved the world forward through their ingenuity and determination. And for generations, everyday Americans could be part of that journey through perhaps the greatest innovation of all, the U.S. stock market. It didn't matter whether you were a factory worker in Detroit or a farmer in Omaha. Anyone can own a piece of great American companies. But now that has changed. Today, our most innovative companies are staying private rather than going public.

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13:39Rich Habits:This is a paid sponsorship. Back to our conversation with Max Lebchin. I want to linger on that half of the two and a half that you had mentioned there around the consumer side of things, because we're seeing credit card delinquencies climbing, household savings are getting drawn down. But you also said on your call that you're not seeing deterioration as it relates to your business. Help me understand that. Is a firm's consumer different or kind of like what you were alluding to? Are you just better at saying no and truly underwriting every single one of these transactions? It's fascinating. The answer is actually kind of both.

14:13Maybe yes is the, we are better at saying no, in a sense that we have the right or the opportunity to be the consultant or the, you know, sometimes people ask me like, what is a firm? Like, what are you to me as a person? And I'm not really a brand marketer. So I've always struggled with these, like, what is it? But someone I know who is a brilliant brand marketer said, you're like the smart older sister. Like, you're like, hey, that's a bad idea. Put down that wallet. Like, don't buy that thing. You should not. indulge like this is the or hey that's cool you deserve it go go get it and so the ability to say no or yes in the right moment the right way as a sort of a friend or a coach or somebody who's actually out to look for your best financial outcome is something that we're very very good at and so because that is a fairly unique value proposition we appeal to a particular type of a consumer like the person who wants that participatory engagement from their credit provider is someone who's actually quite motivated not to be behind our consumer knows we're going to say know when we feel you really shouldn't be buying this.

15:13We also very frequently will say things like, hey, a$600 bicycle is a little bit more than you can afford right now. However, we're quite happy to lend you two thirds of this, but you do have to put one third down as a down payment because that's what we think is the right sort of contours of a loan for you for this purpose right now. And so that consumer is doing fine, but it's also because they want to do fine. They're motivated to improve their financial reality. Like maybe the most shocking thing about Affirm is that we are living proof that in the last 12 months, 27-ish million such people exist.

15:46You would think that, you know, we hear in the front pages of various newspapers is people don't care about their financial reality. They're sort of shopping with their eyes closed. They're not reading their financial statements. And I'm here to tell you that's not true. Like we have tens of millions of people who are coming back to us now almost seven times a year saying, hey, make sure the thing I'm buying isn't going to bite me. I'm not going to regret it. I'm not going to be figuring out how the hell did I get myself into this kind of debt. And so that customer exists. They shop with us. They're doing fine.

16:14I think some of the less scrupulous providers are happy to lend money because they'll make it back in things like late fees and delinquency charges. And we don't do that. And it turns out there's a lot of people in America who actually quite prefer that sort of way of living. And we don't blame them at all. I think I'm preaching to the choir a little bit here, but I just want your viewers, your listeners to know they're not alone. There's a lot of people who really want to have a lifestyle that they can afford, but also profoundly enjoyable.

16:40Rich Habits:Yeah, I want to go into some more numbers. You've been throwing around all these great growth numbers, but I saw that the Affirm card more than doubled to 4.4 million cardholders. And you also announced Affirm Edge to embed pay over time inside banking apps that now reaches 130 million Americans. Both of these moves are about going from a button at checkout to a default payment system inside of someone's life. How do you think about this from a cannibalization versus an expansion here for people that are trying to buy things the right way and use your service? We're not so large as to worry about cannibalization of anything just yet for a very long time.

17:22The total addressable market of U.S. commerce is, call it on the order of a trillion dollars plus that we can play in right now, just given the products that we have. 20%, last I read, happens online. All those metrics are giant. If you look at the number we put out as our, this fiscal year, expected GMV volume, it's still touching 50 billion. That seems like an enormous number. It is an enormous number, just in the absolute scale, But in the grand scheme of credit card payments or commerce payments or e-commerce, any denominator you choose, we are so tiny, capitalization doesn't enter my imagination.

17:58So that's sort of part one. Part two, I'm completely serious when I shake my fist at the compounding interest and revolving debt and fees that shouldn't exist. And it's the best kind of problem to have if suddenly more debit cards in America end up growing, quote unquote, this borrowing capability that we built into our debit card, because it is that same mode of responsible borrowing with no fees, no compounding, etc. et cetera. So bring that functionality to other issuers, banks, credit unions, fintechs, whoever wants to partner with us. And we're privileged to have a couple of our earliest partners on stage with us at Investor Forum to just sort of telegraph the excitement the industry has about this product.

18:42It's great. I would love for every bank that issues debit cards to have Affirm Edge, the functionality of Affirm card built into their debit card. One of the cool things that sort of bears repeating, the unique thing that we bring to bear isn't just the underwriting, isn't just this sort of clever technical functionality, we do have these arrangements with many, many retailers, many brands that will subsidize these transactions for you. So embedded in that partnership that Affirm Edge is, is a giant tome of promotional finance available to anyone who participates. So we think there's a huge opportunity.

19:14We're very excited. We are but a tiny speck of consumer finance in this country. We would love to bring our flavor to everyone.

19:20Rich Habits:That's fascinating. And I remember when the Affirm card first came out, it was such this revolutionary product in the sense that everything that you bought on the Affirm card was sort of pay-in-for, right? It's not just like, does this specific retailer offer some sort of pay-in-for for a product? It's like, no, you can go buy your Blistex. That's a bad example, but you go buy, I'm looking at my Blistex here. You can go buy something at Walgreens or CVS or something, whatever you need there, use your Affirm card for it. And you sort of have all the same abilities to pay-in-for like you would if it was a specific retailer.

19:53Rich Habits:Now being able to unlock that to not just the 4.4 million people that use the Affirm card, but to your point with this Affirm Edge, I mean, that is fascinating stuff. Just for the record, it's more than Payne 4. So Payne 4 is a great tool. You know, Blistex is probably, I mean, I don't know what kind of Blistex you buy, but mine is quite affordable even in today's strange world. But a nice lunch, you might consider splitting into four if that's what your heart desires. But Affirm card incidentally supports a pay now mode. So a Blistex is probably very appropriate to just pay for it right now and move on.

20:23But if you're looking at a TV or a fridge or something quite pricey, you can go into the Affirm app and with Edge into your bank app and say, hey, the next transaction at Best Buy, not a current integrated Affirm partner. When I tap my card there, I want it to be alone anyway. And so the magic of the Affirm card and included in Affirm Edge stack is ability to say, hey, at this store, whether Affirm is tightly integrated or not integrated at all, or some combination of the two, the next transaction, I want it to be a loan. And I want it to be pre-approved and I want to know my rate, if any, and I want it to be a six-month loan or a 12-month loan.

20:59I want a budget. I want the budget to be up to this number. And if I spend less, I want it to adjust down. And all of this happens seamlessly, basically automagically, while telling you all the time, here's exactly how it's going to work. Here's exactly how much you're going to pay, not a penny more. All the same functionality you come to expect from a firm. And it does support paying for, certainly is a very popular product, but goes out to four years sometimes. So this is a very, very versatile tool. The reason it's been growing by far the fastest in all of our product ecosystem is because it is just such a powerful tool.

21:28And it really is a full-featured replacement for a credit card with absolutely no revolving, absolutely no fees, absolutely no annual fees or anything. I mean, that's the story right there.