Speaker 1: There's one stock that's really been moving over the past
Speaker 1: ten days that we're keeping an eye on, a firm
Speaker 1: around fifteen percent higher over that time frame. It's the
Speaker 1: highest it's been since February. And Affirm this week announcing
Speaker 1: that US Apple Pay users can buy now and pay
Speaker 1: later for as low as zero percent APR. The new
Speaker 1: agreement will allow users checking out online or in app
Speaker 1: with Apple Pay on iPhones and their iPad to be
Speaker 1: able to pay over time with Affirm. And we are
Speaker 1: joined by none other than a firm's co founder and CEO,
Speaker 1: Max Levchin. How does this change the game for you,
Speaker 1: because obviously a lot of users use Apple Pay. Apple's
Speaker 1: own entry into financial services has been a massive wonder
Speaker 1: of the industry, to say the least, But now the
Speaker 1: addition of buying now paying later through a firm, what
Speaker 1: is the expectation here?
Speaker 2: It was just really exciting.
Speaker 3: It's first and foremost, it's unbelievably great to have direct
Speaker 3: integration into a really best in my biased opinion, I'm
Speaker 3: sure digital wallet out there super early days. We've been
Speaker 3: lived for three days, so you know, don't ask me
Speaker 3: for results just yet. But the actual implementation is wonderful,
Speaker 3: and so I'm very excited about the possibilities here. Obviously,
Speaker 3: it's going to be great for consumers that love their
Speaker 3: digital wallet, but it's also going to be amazing for retailers.
Speaker 2: It's just in time for the holidays.
Speaker 3: You'll be able to use your Apple Pay affirm integration
Speaker 3: to buy gifts, to affirm all the things you need
Speaker 3: to have for your loved ones, et cetera.
Speaker 2: So just just really excited about the possibilities.
Speaker 1: It's interesting you and I are old enough to remember
Speaker 1: years ago when I was bothering you left and right
Speaker 1: about what it would mean for Apple to get into
Speaker 1: buy now, Pay Later, and now they're partnering with you.
Speaker 1: There was a time where people would worry about whether
Speaker 1: that would create a significant competitive force. The way the
Speaker 1: landscape is shaking out is through partnership and massive way
Speaker 1: with the giant tech companies. How do you expect that
Speaker 1: to continue to extend because it seems like a pretty
Speaker 1: massive change from what we saw a few years ago.
Speaker 3: It's still a very young industry and partnering well is
Speaker 3: what we have become known for.
Speaker 2: You know, we count the largest.
Speaker 3: Retailers, the largest platforms, some of the best known brands
Speaker 3: in the world among our partners, and it's always for
Speaker 3: the same very basic set of reasons. We treat both
Speaker 3: sides of the customer ecosystem right.
Speaker 2: We don't charge lead fees, we don't hurt our consumers.
Speaker 3: We're very careful to say yes and know when we
Speaker 3: don't believe someone will pay us back.
Speaker 2: And we really deliver value for retailers.
Speaker 3: We increase their average sales, we help them drive conversion
Speaker 3: at the point of sale. And so those two things
Speaker 3: combined make us data deal partner. And you know, it
Speaker 3: helps to be built by very serious computer scientists, which
Speaker 3: means that we can scale with volume. The spikes you
Speaker 3: see during Black Friday and the holiday season are pretty
Speaker 3: significant technical challenges and we're just very very good at it,
Speaker 3: and so that's why we're picked by the best brands
Speaker 3: out there to be partnered with.
Speaker 1: Another aspect of this is you have seen some of
Speaker 1: the retailers you work with. Some have had some knockout
Speaker 1: numbers in the last couple of months, but others have
Speaker 1: really faced weaknesses in the consumer And if you think
Speaker 1: about the path forward here with that interest rate cut,
Speaker 1: how does that really change the game? Do you expect
Speaker 1: consumers to still be this bifurcated in the market. Do
Speaker 1: you still expect significant weaknesses until we see a much
Speaker 1: more significant level of cuts.
Speaker 3: It quite good to predict macroeconomic events as as well
Speaker 3: as that I probably would have a very different job.
Speaker 3: But a firm consumer is buying and shopping. We've just
Speaker 3: reported numbers a couple of weeks ago. They look very strong.
Speaker 3: We are forecasting a really great growth going forward in
Speaker 3: this fiscal year.
Speaker 2: So cautiously optimistic.
Speaker 3: US consumer is shopping, they're buying, they're paying their bills
Speaker 3: with a firm and so that seems to be going well.
Speaker 3: The FED lowering the interest rate obviously among other things,
Speaker 3: suggest the FED is worried about too much of a
Speaker 3: slowdown and that their war on inflation has now been
Speaker 3: bla blah one. So you know, I'm in a cautious
Speaker 3: posture relative to US consumer. That said, we're seeing great demand.
Speaker 1: What are you expecting for the holiday season? You were
Speaker 1: talking about that a little bit before. You were talking
Speaker 1: about how you expect people to pay for their holiday
Speaker 1: shopping on Apple pay who if you guys, among other things.
Speaker 1: What do you think will happen this holiday season? Relative
Speaker 1: to years past from what you know.
Speaker 3: This being an easy prediction to make, but I'm relatively
Speaker 3: sure this holiday season will be the greatest number of
Speaker 3: people affirming their gifts ever.
Speaker 2: That's my prediction for our business. I do expect there.
Speaker 3: To be a significant amount of AI curated gift lists.
Speaker 3: I think that's a big new thing, and there'll be
Speaker 3: a lot of attempts to drive.
Speaker 2: To drive people's buying with just.
Speaker 3: A more curated experience, which now can be done using
Speaker 3: JENIAI So I'm pretty excited about that. And then I
Speaker 3: do see already early in the holiday shopping season retailers
Speaker 3: coming to us and saying we would like to subsidize
Speaker 3: the interest of consumers might pay in these loans, and
Speaker 3: they choose to essentially offer zero interest loans, zero interest
Speaker 3: financing plans that we power of course for everything from
Speaker 3: four weeks.
Speaker 2: To four years late.
Speaker 3: And so I see a lot of that coming, which
Speaker 3: will be amazing for consumers. Being able to take more
Speaker 3: use of money over time without paying any interest is
Speaker 3: pretty awesome.
Speaker 1: Glad to hear you talk more about Jenai, because the
Speaker 1: last time you and I have talked about it, we
Speaker 1: were kind of talking about the limitations and you know,
Speaker 1: kind of the more boring use cases, let's say it.
Speaker 1: When it came to AI and jen AI and financial
Speaker 1: technology in particular, what's changing, especially because you dovetail with
Speaker 1: the world of e commerce so greatly, So I think.
Speaker 3: It's becoming more and more user friendly on the consumer side,
Speaker 3: and I think AI shopping assistance and all the various
Speaker 3: things that retailers are pouring resources and you know, genuinely
Speaker 3: excited about is pretty great. We don't talk a ton
Speaker 3: about it because we want to be very careful to bifarcate.
Speaker 2: We do not use GENEI for underwriting.
Speaker 3: That is something that has to be very predictable and
Speaker 3: cannot hallucinate, so we stay very far from that. We
Speaker 3: do use it for productivity enhancements internally with really wonderful effects.
Speaker 3: I keep unshipping these really cool new ways for our
Speaker 3: consumers to quickly get to the right answer when they're
Speaker 3: contacting us for customer service purposes. We're also looking at
Speaker 3: all sorts of acceleration in our development schedules because we're
Speaker 3: able to use these AI generali tools, and so there's a.
Speaker 2: Lot to be excited about.
Speaker 3: Just you know, like every new technology you have to
Speaker 3: be appropriately careful in use cases that you don't fully
Speaker 3: have control over.
Speaker 1: Max Back to the consumer for a moment here, because
Speaker 1: you and I talk about this a lot. The credit
Speaker 1: card uptake in the country right now, people have been
Speaker 1: maxing out. We are near record levels of credit card
Speaker 1: balances across really the spectrum of America. And then you
Speaker 1: also have rates above twenty often twenty five percent aprs.
Speaker 1: How fast does that come down? And you know, even
Speaker 1: if you can't tell me how fast, or if you can't,
Speaker 1: then what is the relationship between how people use buy now,
Speaker 1: pay later and a mass credit card debt?
Speaker 3: So from my point of view, and you know, am bias.
Speaker 3: So I'll talk about on book for a second. We
Speaker 3: are the right alternative to credit card debt if you
Speaker 3: are borrowing to pay for things over time, which all
Speaker 3: of us do. You know, from education loans all the
Speaker 3: way to holiday gifts, you are better off not revolving
Speaker 3: full stoff when your interest compounds. Into principle, you are
Speaker 3: paying on an exponential curve, and that what credit cards
Speaker 3: do for you. And so I am genuinely conserved of
Speaker 3: credit card balance is growing less because of the absolute
Speaker 3: number of these balances more because of the type of
Speaker 3: debt that they're generating. It's the debt that can't run
Speaker 3: away and does run away from people. The reason by
Speaker 3: now pay later, the reason Affirm in particular, is such
Speaker 3: a good alternative is in our case not just that
Speaker 3: there aren't any FeAs and there's no penalties. In there
Speaker 3: are gonschias, the interest doesn't compound. Into principle, if there's
Speaker 3: any interest to pay at all, it is very reasonable
Speaker 3: to stretch your budget by paying over time. It can
Speaker 3: be dangerous if you revolve on that debt and have
Speaker 3: no idea how you're going to pay it off. And
Speaker 3: I sometimes call credit cards by now pay forever for
Speaker 3: exactly that reason.
Speaker 2: By now pay later is a safer alternative.
Speaker 1: Max, we have to leave it there. But of course
Speaker 1: this is a much longer discussion. This is going to
Speaker 1: change very quickly this world in the next year. So
Speaker 1: that is a firm co founder and CEO Max Lenchen