It’s axiomatic that if you want to be a successful innovator, it helps to “fall in love with a problem”. That’s where a lot of great innovation begins.
Yesterday I had a chance to see Max Levchin speak at a conference on Sand Hill Road, organized by Jessica Lessin of The Information. I‘ve met Max a couple times before and he’s one of the smartest guys in Silicon Valley.
Yesterday he talked about the company he currently runs, Affirm, and how he decided to create it.
“I was already kinda in love with solving financial services problems”, he said (he was a co-founder of PayPal, after all), “and then I spent some time doing research on the credit card business, trying to figure out what opportunities there might be there. The more I learned about how the credit card industry operates, the more enraged I became”.
He went on to talk about how the traditional credit card business works— high interest rates, late fees, and something called “The Flip” where if you miss a single payment some credit cards actually hike your interest retroactively. Many credit card companies make most of their margin from practices like these.
“So I guess that’s how I founded Affirm”, Max said, “It was love plus rage”.
To create the solution they had to develop relatively deep technology, including their own method of credit scoring and their own loan servicing. “We ended up needing to own and operate the whole stack”, says Max.
Today, Affirm has raised over $1 billion in capital, and they offer simple easy-to-understand purchase financing to millions of consumers. They provide instant approval, no late fees, simple terms, and no “flip”. Affirm has an NPS of 83 — almost unheard of in their sector.
All because Max, as an entrepreneur and innovator, successfully found a problem that prompted feelings of “love plus rage” within him.