Speaker 1: Well, you might remember yesterday we talked a little bit
Speaker 1: about Jamie Diamond of JP Morgan his annual shareholder letter.
Speaker 1: He waited on a lot of things, including how he's
Speaker 1: keeping an eye on fintech startups and perhaps maybe one
Speaker 1: of those firms is one like our next guest. We're
Speaker 1: talking about a firm, and let's bring in the founder
Speaker 1: and ce of a firm to get a feel of
Speaker 1: what they are up to, what's going on with consumers
Speaker 1: and digital commerce. Great to have back with us as
Speaker 1: Max Levchin, he's co founder PayPal, he is founder and
Speaker 1: CEO slide that was sold to Google, chairman of Yelp
Speaker 1: for many years, and he joins us on the phone
Speaker 1: in Hawaii, and it's great to have you back. How
Speaker 1: are you. Thank you for hearing me. Um, I'm doing well,
Speaker 1: spring break, I'm working, but thank kids are really enjoyed
Speaker 1: this one. I bet I bet no. I know it
Speaker 1: does feel like well you tell me, Max, I feel
Speaker 1: like there's a lot of areas we can go, but
Speaker 1: first of all, your company, Uh, it's really unique in
Speaker 1: that you do get a window into what's going on
Speaker 1: with consumers. It does feel like the world is reopening
Speaker 1: I'm seeing more activity. I've gotten one vaccine. I know
Speaker 1: a lot of people in my orbit have all of
Speaker 1: a sudden in the last few weeks gotten vaccines. It
Speaker 1: feels like things are opening up. How do you see
Speaker 1: it and what's going on with consumers? I think the
Speaker 1: you know, I think your your your your sense for
Speaker 1: this primed to get back to hopefully normal or semblance
Speaker 1: there off is really spot on. We're seeing this in
Speaker 1: our idea obviously tracking every machinable metric. What is the
Speaker 1: curve of recovering going to look like? From my point
Speaker 1: of view, the most important thing I care about is
Speaker 1: the health of the consumer. On the financial side of things,
Speaker 1: and we've seen and too much thanks to the action
Speaker 1: by Final Reserve and government in various places, there's just
Speaker 1: a tremendous amount of where we consider it to be
Speaker 1: good consumer behavior. There's a lot of savings and this
Speaker 1: is to me that means people are saving up to
Speaker 1: really go out and have a wonderful vacation that they've
Speaker 1: helped back on. And you know, we're seeing conversations with
Speaker 1: our partners places like Verba and Pacasa, etcetera, um on
Speaker 1: the sort of overall health from the death in comboration
Speaker 1: side of things. Americans have paid off most three billion
Speaker 1: dollars in debts during the pandemic, so they put some
Speaker 1: of those stimulust checks to again, from my point of view,
Speaker 1: the right the right thing to do. Uh. And then
Speaker 1: just the overall consumer confidence is really high and jumped
Speaker 1: to one year high, which is maybe maybe from a
Speaker 1: low point of a year ago. We weren't really taking
Speaker 1: these log downs seriously, and at this point I think
Speaker 1: people have you know, they've suffered and they're really looking
Speaker 1: forward to really well, let me ask you something that
Speaker 1: is your company, you know, offers installment plans right to
Speaker 1: online shoppers, um, and lets people kind of pay over time.
Speaker 1: Are you seeing less of that because people are using
Speaker 1: more of whether it's stimulus dollars or just you know,
Speaker 1: savings in general, to pay down their debt. Can you
Speaker 1: make any kind of conclusions along those lines, Um, you don't.
Speaker 1: We have seen exceptional growth in the last year, and
Speaker 1: so I would not characterize it as seeing less. I
Speaker 1: do think that people are using their similar dollars. Sensibly,
Speaker 1: we have a staving feature that we offered to our customers,
Speaker 1: and we've seen influx of staying increases as the government
Speaker 1: sent checks to consumers, and so I think that there's
Speaker 1: a sort of very visible correlation there. Uh. I think
Speaker 1: it's really interesting about the effect of the pandemic and
Speaker 1: a long term state of e commerce and just shopping
Speaker 1: in general, is we've trained a whole generation of people
Speaker 1: that we're just not going to go online. Folks like
Speaker 1: my mom, who is in her seventies, who enjoys her
Speaker 1: offline shopping. It's you know, she's now very well versed
Speaker 1: in the idea of boxes coming to her door. And
Speaker 1: so we brought in a bunch of e commerce shoppers,
Speaker 1: and I think they're here to stay. And I think
Speaker 1: what's really going to be required of us in the
Speaker 1: binoculator industry and broadly specard providers and payments, we have
Speaker 1: to meet this new consumer behavior with buy online and
Speaker 1: pick up and store or return in store, exchange in store.
Speaker 1: They're all the mixed omni channel modalities that are suddenly
Speaker 1: going to be much more common, much more important. Yeah,
Speaker 1: I have to say too. In retail, I mean I
Speaker 1: look for places where there's lots of ease I can
Speaker 1: if I buy online, can I easily return it either
Speaker 1: through their taking care of it, or they're taking care
Speaker 1: of shipping, or I can drop it off at one
Speaker 1: of their storefronts. And you know, we've talked about omni
Speaker 1: channel for a long time, but I think now I
Speaker 1: totally get it of what it really needs to be.
Speaker 1: In order for it to be incredibly productive. You have
Speaker 1: to be met where you want to be met, especially
Speaker 1: as we're still for coming back to it's safe. Yes,
Speaker 1: maybe I have my half vac scene or how safe
Speaker 1: am I? I don't really want to go hand around
Speaker 1: and big showroom. But if I buy online and I
Speaker 1: need to get rid of it, it has to be
Speaker 1: very quick. I don't want to repackage it and you know,
Speaker 1: to get to the post office, I need to bring
Speaker 1: it back to the door. Stuff. Yeah, So I think
Speaker 1: that's that's that's a big important change. So when you
Speaker 1: talk or you see what's going on in terms of spending,
Speaker 1: because you help folks whether they're buying, you know, a
Speaker 1: peloton or they're traveling or buying stuff at Williams Sonoma,
Speaker 1: what is it where do you see people spending the
Speaker 1: most money? At this point, Max, you know, we were
Speaker 1: so diverse in our merchant coverage. It's almost uh, you know,
Speaker 1: we aren't we seeing this most interesting area that we're
Speaker 1: seeing growth and right now is of course travel. But
Speaker 1: I think that's that's almost a fat a company at
Speaker 1: this point. They're all these people who are just dying
Speaker 1: to get out of their four walls by anything necessary.
Speaker 1: The other areas are just gonna any totally really funny
Speaker 1: but makes total offense. But I was sort of shocked
Speaker 1: and then not shopped at weddings, you know, unbelievable influx
Speaker 1: of demand for wedding everything. Do you if you pumped
Speaker 1: it or postponed or fell in love during you're gonna
Speaker 1: get married and you're gonna have a big party. But
Speaker 1: where we're seeing a lot of that. I have to say,
Speaker 1: I think I know three or four people in my orbit.
Speaker 1: You know, I had tried to schedule a wedding several
Speaker 1: times um over the last year, and I had to
Speaker 1: keep you postponing it or people who got married but said, listen,
Speaker 1: we're going to do a party as soon as things
Speaker 1: open up. So a lot of that's going on. Tell
Speaker 1: me about your company here, you are nine years in
Speaker 1: three months roughly since you I p oed um. I
Speaker 1: mentioned I was trying to find my notes on those
Speaker 1: stock prices up about for since that January, I p O,
Speaker 1: you know, how is your company change and evolved along
Speaker 1: with what consumers need or what the market needs know it?
Speaker 1: So it's it's actually a very rewording moment. It just
Speaker 1: literally happened. I was on PI day market our birthday,
Speaker 1: and you know, on the one hand, everything has changed.
Speaker 1: You nine years ago, ide bioppulator just wasn't the thing.
Speaker 1: People believe it. They cards are fine, and I had
Speaker 1: this sort of very strongly word a point of view
Speaker 1: that the credits is broken. We need to provide a
Speaker 1: more flexible mparent alternative because not want to be confused
Speaker 1: by their just great. They want that exactly when and
Speaker 1: how they will get out of pain, their their their
Speaker 1: their payments. And so we made this mission to create
Speaker 1: financial products that improve lives and at a state exactly
Speaker 1: the same. And it's really awesome to just to be
Speaker 1: able to look back and get we've been doing the
Speaker 1: same exact thing while evolving and changing everything for nine
Speaker 1: years straight, and it feels like we're probably five percentage
Speaker 1: percentage what we were trying to accomplish. So it's it's
Speaker 1: one of these things. But it's the longest project I've
Speaker 1: heard done in my entire life starting companies in college
Speaker 1: and I have no interest in slowing down or got
Speaker 1: for both pausing, So it's really fun. Well where do
Speaker 1: you want to take it? I mean, you've introduced the
Speaker 1: affirm card. Um you know, tell us about you know,
Speaker 1: how you're thinking about things, how you grow the business
Speaker 1: obviously because you are a business, but how do you
Speaker 1: know continue to kind of innovate and think about the
Speaker 1: services that are needed. Right now, the opportunity is just
Speaker 1: almost overwhelming. So obviously we're gonna stay true to our mission,
Speaker 1: will be transparent and be honest. We won't charge you
Speaker 1: lead people want charge you an it's easy, don't expect um.
Speaker 1: But there's lots of different lectures and we're trying to
Speaker 1: pursue them all as much as as much as we
Speaker 1: can so that the card is obviously you have a
Speaker 1: fundamental products for us because it we think it gives
Speaker 1: us permission to be in your everyday financial life. Up
Speaker 1: until now, every by malpulator provider is something that you
Speaker 1: encounter at the point of sale. You may learn about
Speaker 1: it then or not. This is a product that we
Speaker 1: expect to deliver to our customers and say hey you
Speaker 1: can have this bet are more transparent or honest way
Speaker 1: to transact with you every single day in your wallety
Speaker 1: digital Laalan or a physical one. And so that that's
Speaker 1: something that we just expected to spend lots and lots
Speaker 1: of side doesn't really really be you very really excited
Speaker 1: about this project. We have just a crazy number of
Speaker 1: really amazing platform integrations that we're either launching or contemplating
Speaker 1: on ful buildings and Shopify some thing that we announced, uh,
Speaker 1: you know, half a year or something like that. But
Speaker 1: it's something that's with reason building out and we see
Speaker 1: more opportunities to come in and help folks that serve
Speaker 1: merchants just provide more transparent and better financial products to
Speaker 1: their shoppers. Shoppers with the underlying merchants, and they're just
Speaker 1: a huge number of merchant services that we can bring
Speaker 1: to the markets to help our merchant partners do smarter,
Speaker 1: better things for their customers. So it's it's want to
Speaker 1: be saying no matter how fast I talked, I will
Speaker 1: barely touch on the ant opportunity. Well, listen, you know,
Speaker 1: if you check out what you guys are doing, I
Speaker 1: mean no late fees, no prepayment fees, no annual fees,
Speaker 1: and no fees to open or close your account. Um,
Speaker 1: I'm looking at your website, but I you know, it
Speaker 1: was reminded of kind of your strategy. UM. Remind first
Speaker 1: of all, it makes me wonder why wouldn't anybody or
Speaker 1: just everybody just do it this way versus traditional cards.
Speaker 1: I'm not trying to be a commercial for you, but
Speaker 1: I mean, first of all, how do you remind our audio?
Speaker 1: It's how you're making money. So about half of our
Speaker 1: transactions are both interest free, and all the fees that
Speaker 1: you you're at up, you know they never apply, have
Speaker 1: never applied. One of my favorite stat about a firm
Speaker 1: is zero dollars and zero sense of he's charged ever,
Speaker 1: And so that that that's a really good way I'm
Speaker 1: judging us and who we are. UM, so you know,
Speaker 1: there are two sources of income for us, precisely, and
Speaker 1: merchants pay us a little bit or processing these transactions
Speaker 1: for them, and we bring to them and exchanges typically
Speaker 1: very significant increase in conversion as well as average order value.
Speaker 1: So folks that are on defense about buying something that's expensive,
Speaker 1: maybe just a little uncomfortable doing against their checking account.
Speaker 1: Well will help them split it into anything as as
Speaker 1: quickly as six weeks to as long as four years,
Speaker 1: and so that that that's convenience with the knowledge that
Speaker 1: there will be no incremental interests penalties of any kind.
Speaker 1: It's a very powerful driver of conversion and increase spend,
Speaker 1: and so merchants are happy to pay for that. Typically
Speaker 1: are this is win win relationship. There Uh, in some situations,
Speaker 1: the merchants would like us to charge consumers interest, and
Speaker 1: we do in about half the time or I think
Speaker 1: a little bit less and half time obviously fluctuates depending
Speaker 1: on our merchant base, consumers staying no interest at all,
Speaker 1: and in some situations actually really really cool. We have
Speaker 1: these magical moments where consumers pay no interest at all
Speaker 1: and the piece of course, and the merchants pay precious
Speaker 1: little because it's the manufacturer that wants to subsidize the transaction,
Speaker 1: and so they step in to help us deliver this amazing,
Speaker 1: amazing saving for consumers would do the gameor time, but
Speaker 1: it's cost them nothing about the sticker price, while the
Speaker 1: merchant just looks to sale. And so we see those
Speaker 1: models taking significant root in the industry as well. All right,
Speaker 1: I'm gonna end on a lighter note. Just got about
Speaker 1: thirty seconds how many Pelotons were going through your network
Speaker 1: during the past. Think I'm allowed to say that anymore.
Speaker 1: I can tell you that I think we're officially up
Speaker 1: to a full Pelton device family. So so, in other words,
Speaker 1: in your own household, there was a lot going on. Um,
Speaker 1: great stuff, Max, Thank you so much. We I always
Speaker 1: loved talking with you. I really appreciated good luck and
Speaker 1: congratulations on nine years, and look forward to checking back
Speaker 1: with you soon in the future. Max Leftkin He is CEO,
Speaker 1: chief executive officer, founder of a firm, co founder of
Speaker 1: PayPal uh. He was also CTEO of that company and
Speaker 1: chairman of Yell for about eleven years from its founding days.
Speaker 1: So just great to check in with him.