 All right. Max, thank you for coming to Slush. Thank you for having me. Let's start with a fun question. This is your first trip to Finland. Correct. But you have a real love for Finnish rock music, believe it or not. He knows the history of Finnish rock music and he really does. How did that happen? I'll try to keep it short. So when I moved to the United States, I grew up in Ukraine, moved to the US in 1991. I was a typical Eastern European engineer who thought that writing code in assembly language was the pinnacle of manly expression because everybody else needed high-level languages. And I could just go directly to the hardware. And I was the only person like that I knew in Chicago, except there was this whole BBS scene before the web, where I randomly ran into what became known as the demo scene, which was perhaps randomly centered in Finland. And so as I learned more and more about these people worldwide that were crazy assembly language hackers pushing hardware to its limits, building these amazing demos, competing, I became more and more obsessed with this magical place called Finland, where they got together once a year at Assembly, the big conference, and showed off their software to each other and started absorbing the culture and getting into it. And you never came, but you absorbed the rock music part of the culture. And I think what was interesting, I've heard about the demo scene before. People always think of Nokia being the core of Finnish technology, but the demo scene predated Nokia in many ways. Let's talk about PayPal a bit. So I want to talk about for all the founders and soon-to-be founders out there, I want to hear about the earliest days of PayPal. You told me before, employee zero, which I think is interesting. What was that like? What do you remember most about those days? Oh, as a co-founder and an engineer, I have to start from zero, as software people do. Back to the demo scene for a second. I randomly met this guy, Peter Thiel, at a lecture at Stanford. I pitched him an idea that was extremely different from what PayPal is today or was even 20 years ago, but he was crazy enough to say, I'll invest in your company. And in the back of my mind, I thought, I have no idea what to do with that. I want to be the CTO. I'm going to recruit you as a CEO. I said, okay, that worked out, but you have to go recruit a technical team. And so I basically looked at the smartest engineers I knew in my head and they were all demo-seeners. And so I recruited a bunch of people from my demo scene friendships from high school and college. And we, for about a year, we were just heads down writing code and majority of that code got thrown away because the first product didn't work and the second product didn't work and the third product didn't work as it always happens in startups. And, you know, as a founder myself, I always think about the incredible roller coaster of being a founder. And I actually, I remember seeing pictures of the early days, you were like sleeping under the desk or something at PayPal. And I just, were you, how aware were you of the risks of being in that start, the ups and downs? Or how stressed were you about with the direction? Or were you more just like, just get me the, let me code and let me just get my little thing? I think I benefited tremendously from the fact that PayPal was, I think startup number five and the previous four failed. So I was very accustomed to working very hard, failing, picking up the pieces, doing it again. So I was not scared of failure. I was actually very worried that if this fails, like I was reluctant to recruit a team because my previous startups, it was just me and a co-founder or me and a co-founder and one other engineer. And so I knew how to handle the tough conversation guys we failed, we have to shut down. But within a couple of months, we had like 15 people and then 30 people and Peter insisted we hire more people. Like Peter, if this fails, we will have to own the failure in front of 30 people, 100 people, like that's terrifying. So I was very worried that once it fails, which it always had before, I would have to eat the bitter bread in front of a lot of people. Wow, okay. And I think all of you from that group, Peter, Elon, Reed, Jeremy, you're still all very close, but I want to tell you one, don't call it a mafia. They don't like the mafia term. It's more of a squad or a crew. And what do you prefer here? I haven't thought of an alternative. Okay. Group noun, but mafia suggested we got together to do something nefarious and we were young and idealistic and wanted to change the world. Got it. I want to talk about Slide. One of your companies you founded that doesn't get that much play. People don't talk about it very much. You started four companies before PayPal, then you started Slide, I think, right after PayPal. Yeah. Tell us, and I think on PayPal it was a success, but tell us a little bit what was Slide and a little bit about, you told me it wasn't very satisfying there, so tell me a little bit about that story. Slide basically, so right after PayPal ended, I wanted to step back and develop a framework for what will happen. So the internet boom was booming and I wanted to have a framework for what next company I might start. So I sat down and wrote these big thesis around the internet is becoming social, social interactions are fundamentally sin-driven, so I wrote down seven deadly sins and said I'm going to start a company or fund the company for every sin. The most important sin is vanity because it's the one that everyone has no matter how much they try to avoid it. So I should find an idea that is all about vanity and that led to Slide, which was basically a photo sharing slash media sharing company and I maintained that the logic was perfectly sound except I told myself a story that that's what I really was trying to do, what I was really trying to do is say I'll do anything except for payments because my one success, up to PayPal everything failed and then I finally got one success under my belt and I was the payments kid and then I was a payments guy and then I was a not so young payments man and then I really wanted to be not a payments guy. So I was like I'll do whatever and here's a story and so we built this media sharing company and then it did find Google acquired it for quite a lot of money and everybody did financially great but all throughout the process I kept on looking in the mirror and saying, okay I'm not a payments guy now but I'm not a happy non-payments guy and ultimately if you don't have the love for what you do it's very hard to be satisfied by what you're doing. And I told you earlier that when you started that I was, I think I was, I had it around a media company and I was also at Viacom during the period and I kept thinking because I kind of knew you. I'm like he's not a media guy. What is he, what is he doing starting this media business and it was always like thinking but then you sold it for a bunch of money and I was really jealous. I was like how did he do that? And by also looking at today I look at Elon and Twitter and Elon has done great with lots of hardware things but he's not a media guy either and Twitter is a media business so you don't have to comment on that but I definitely like I saw this parallel between like is this really in his heart like it wasn't really in your heart either at that point. Yeah, all these PayPal guys trying to get into media may be a theme there. It might be a little bit of a theme, yes. Let's talk about a firm. You're 12 years in on this one but how did you start this company and why? So now you're like okay you tried the media thing, didn't work, you're like okay I guess I'm a payments guy. So in many ways, so I had this extremely helpful conversation with my wife who knows me from the very first year of PayPal who had set me down and said you're not a media guy, get over it and two, all of that contortionism around not being a payments guy, you are a payments guy. You love this stuff every time you hear somebody talk about a payments startup, you get so into it like it's time for you to go back to your roots and find out if there's somebody to do in payments and I was like yeah but it's been there, done that and now there's Stripe and all these companies and all these amazing things, like what will I find? And it happened to lunch with a person who happened to be my chief risk officer at PayPal 20 years before who proceeded to co-found Palantir, a very very successful guy, Nathan and just randomly I said you know, the interesting thing, we had all this information at PayPal, all these payments, data points, we never tried to do credit and it's such an ancient industry and yet it's still underwritten and processed and done the same way it was done in the 70s with credit cards and the fundamental kind of decision making is rooted in like the 1600s. No one's ever really tried to poke at it very hard to see what happens and we stared at each other for five minutes kind of going like you're right, there hasn't been a lot of innovation in that and so I went home and said it can be true, there has to have been something and there were a lot of attempts but by then the bug got me and I was like well yeah maybe one be the only one, maybe there'll be other people doing it like I'm so excited to dig into something that I care about, like I don't care if there's a million other people doing it, I have to do it myself. So Nathan eventually co-founded a firm with me and we found some other people. And wasn't there like a kind of a fairness thing about it too or thinking like the problem is that the credit industry was just inherently unfair to people so I'd like to hear more about that. Exactly so the other thing that happened so I'm an immigrant in the US and once you're successful you kind of tend to push bad memories of your early days as an immigrant out of your memory the more I thought about credit the more I came back to this one story where in college one of my companies failed as they all did then and I just could not pay my credit card bills. Like I had zero money and I was too proud to ask my parents for help and they were very poor immigrants too and so I just didn't pay my bills for three months and I got nasty calls and it was very embarrassing in my roommates be like oh you have a collector on the phone you gotta pick it up and like so fast forward 10 years I had long been okay financially I had a well-paying job being Chief Technology Officer of PayPal we just do the company public I went to a car dealership to buy a new car which was my very first new car and the guy checked my credit rating and said your credit is so bad the only way you'll get a car today is if you pay cash for it like you cannot get a car loan your credit is ruined. What kind of car was it? I wanted to buy a convertible because I was living in California so I wanted a small convertible to take my girlfriend now wife driving along the coast and she was right there with me and I was turning purple with embarrassment and so this visceral feeling of I have a great job and my financial stability is assured I am a newly minted independently wealthy person and yet my score is dragging behind me like an ankle weight that I can never get rid of and it took another multiple years to recover my credit score and so that was like the one sort of visceral memory like why does it take so long to fix the mistakes of your past and two, as you look at credit offerings just overall not just for people who have had a mistake in the past even people with perfect credit scores inevitably the deal between you and the lender is always a bet where you're betting on yourself and the lender is betting on you screwing up where if you're late, they have late fees so they can make more money if you didn't make the minimum payment on time there's typically some kind of a penalty that kicks in that makes it even more expensive all the conditions are in very, very small print on the back of the statement so you don't read it because that describes exactly how much money you're going to pay more than you expected so the more I looked at it the more I thought the real opportunity here isn't to build a better credit score it's to build a credit score and a credit product that actually aligns the interest of the lender and the borrower where if the lender makes money it's because the borrower is doing fine if the borrower is doing well the lender makes everything and if the borrower is stumbling because something bad happened to them they lost their job, they can't figure it out the lender is not motivated to try to rip them off or to make a little bit of extra money and so we built the entire company ethos and every product around this idea that you want to be fully transparent you want to be completely fair and most importantly you want to make sure that if your borrower is doing well then you're doing well and if they're not you don't get to benefit from it Interesting So do you still think the credit score needs to be fixed? Yes, I am confident that the credit score needs to be fixed Got it So how long have you been public now? How many years? We will be two years on in the very beginning of next year So how do you feel about being public? I mean, especially your industry sorry to say has gotten a little bit of a bad rap because Klarna's valuation did this massive drop and everyone talked about it was earlier this year and there was someone in the same industry but you're public and so we see your stock price you see it visibly it's not just one valuation that comes out So how do you feel about that? It's good training for turbulent flying if you're worried about that you get excellent preparedness by waking up every morning and going today my stock will either go up or it will go down and I have no control and no predictability of what will happen I think as a private company you really benefit from this idea that whatever happens out there in the public markets it's all kind of irrelevant like you raise your money, your heads down you're building a product it's going to be okay one day you have to raise money again and then you get revalued and when that happens if the last time you raised money was a huge bull market and you couldn't get a backer to walk away from you because everybody wants to push money into your hands when the market turns down, which is what's happening now you get this punch in the face with like actually your valuation is not at all what it was like so the drop is catastrophic and painful and you have to explain to your employees and you kind of have to tell them that when they exercise their stock options now the actual value of the share is way below what they paid for it and in the US in some circumstances it's still a huge tax bill and so it could be very very difficult as a private company as a public company you get revalued every day every second like every trade somebody decides to sell your share at a price and you get used to it and so it's a little bit easier to tolerate the daily fluctuations and the best you can do is remind yourself that it's a voting machine every day and you wish it were a weighing machine that sort of decides you think it's like passing a test or getting a grade on a test but you're not being tested right now you're only being tested in a decade schedule and you just have to keep that very clear in your head and the grade only matters in the final all the other tests get thrown out so was it a good decision to go public? It was in a sense that you have significant liquidity available to you even in the worst possible time in the market which today you could argue one of the worst times in recent history if a firm needed more capital we could sell more shares and that's fundamentally reassuring I think to employees and shareholders but at today's price I'm not sure I would be interested in selling shares fortunately we did very well in our IPO so our cash position is significantly better than any of our competitors and I don't think you can do that quite easily quite as easily if you're a private company So a lot of public company CEOs talk about how they get pulled into things that are those requirements for the job which are pulled them away from what they really love about the job how do you manage the kind of responsibilities of being a public company CEO compared to some of the passionate things you want to work on? That's definitely very true and very hard and the thing that I promised myself is I will just not care about the quarterly earnings and just keep my schedule and my head oriented around here's what will happen if it takes three months, three months if it takes six months, six and if I need to think decade out that's what I should be doing and you sort of believe that and then the quarterly earnings time comes and you have to prep and you have to write your letter and you have to rehearse your speech and the only way to do well as a public company CEO it's kind of the same way to do as a private company CEO you surround yourself with people that are experts in the area that you need to cover and there are lots of people we're lucky to have some that are exceptional investor relations people and communications people and you can outsource a lot of the really heavy lifting to them and carve out the time to do the things that you're supposed to be doing but it is not the same thing it's not true that you can maintain exactly the same mental orientation as a public company CEO versus a private one and so you clearly love startups I think they are number seven or eight or I even know like you've done a lot of them and so how do you channel that energy and excitement about startups and about starting something new when you're devoted to one company you are a firm so like how do you channel your energy around the entrepreneurship side of you in the multiverse I would have many clones of me starting companies but unfortunately even the multiverse theory does not allow for being aware of your clones and so I wouldn't be able to enjoy other maxes delight in starting companies there's definitely the zero to one stage is like the most exciting most interesting thing that said the impact of the company I have been running for 12 years and the pace of learning is still so good like I'm very very stable and stationary in my job the thing that I think you switch from zero to one is inherently short term you're just trying to survive you're trying to get there and like orient yourself once you have a product market fit and you know whatever your goals are I think the worst case scenario as a startup CEO public or private you become very very fixated on the medium term because you've made it you're okay you're just trying to make your next quarter your quarter after that that's the surefire way to get to the flat part of the S curve like the Vinod Kosla one of my great investors and mentors loves to talk about how all you're doing is you're finding the next S curve if you're not looking for one right now you are just on your way to the flat part where everything slows down where the creativity is no longer relevant where you're just trying to get the next quarter and then somebody buys you the thing that keeps me energized and keeps me going as a CEO of a almost 3,000 person company now so I spent a fair amount of my time asking the question what does it look like 10 years from now like yes we need to make the quarter you know the stock price will not take care of itself we gotta keep delivering the numbers but the five years from now a firm will not be growing at the current pace high double triple digit can only come from the next S curve you have to find that zero to one, one to two high-pace product and you have to invest the effort and be willing to fail so even within a large company different skill set, different mode of operation but you have to find ways to create the next big thing that substitutes for a lot of that startup excitement that I crave and I definitely carve out a lot of time to invest in that so can you maybe clue us in on what yet a firm you're working on that might have that S curve? you know one of the things about S curves is you have to believe but you also have to be very willing to live with the fact that that's the wrong S curve it's actually not gonna work so the things that we work on inherently have capacity for failure they're not extension features they're things that may or may not work so a firm from inception we were a e-commerce focused point-of-sale lender so if you're buying a couch, you're buying a Peloton bike you're buying a t-shirt we will be there to transparently pay for it over time buy now, pay later is the term of the trade I don't particularly like the acronym but that's what people know it to be and it's basically all online and at this point a firm is 2% of U.S. e-commerce which is kind of an incredible number it's a four-ten-year-old company to account for that as much as cool and also suggests that there's a lot more room to grow but we've never really figured out a product that works offline and so about two years ago I started asking the question how do you take a firm core values which is transparency and credit in a way that's accessible and fair and good without a phone in your hand without an online checkout and put it into a user interface that could be used by groceries and to go into a physical retail and the honest answer is it has to be a card because the credit card or the debit card interface is the best payment interface ever created I think even touchless pay is still not quite perfect because your phone sometimes has hiccups, sometimes it's out of battery there's all these reasons why your phone transaction fails if you have a card whether it's touchless or a swipe or a chip it is the ideal interface for payment that literally go and you're done and so how do you package a firm which is fundamentally anti-credit card like it is literally the anti-credit card product how do you pack it into a card and so we built this thing we call it debit plus it's still very much at its infancy it I think will be the most important thing that happened because it's kind of exists in this blank space between credit cards and debit cards where it allows you to borrow money but only if you want to and either before or after the transaction it's entirely configurable I have no idea whether it's gonna be the biggest thing ever or a footnote in our history but that's what I'm very focused on right now well it sounds pretty worthwhile to me so I think it's very cool the current economy is what it is you and I both lived you were at PayPal in 2001 you were doing Slide in 2008 what do you think about today I mean it's been talked about a lot but I'm kind of curious from your perspective on it it's very unique I think this is the this particular downturn is in part caused by geopolitical events that were not the triggers behind 01 and 08 I think we were fortunate to be in peacetime back then there was no pandemic to get rid of there was no government-created glut of currency and so I think all these things are unique and different but then again every major financial markets upheaval and real economy upheaval was always different I was very lucky the first two times during 01 we had just raised a very large round of financing and so we kind of could go into a cave and build product and just not worry too much during 08 exactly the same thing I raised money for Slide in late 2007 and we were very well funded and could hide out and just work we're very well funded right now we have almost $3 billion in cash with a firm but being public you get to experience the roller coaster very directly on any given day but I think the only way I know how to cope with extreme downturns and is to just go build great product and as the downturn every downturn it inevitably has a bottom and the recovery and the recovery is glorious but if you're starting your company you're far better off starting it now than as the recovery begins because everybody's starting their company when the recovery begins right now only the brave and the crazy are doing it and so you'll have a huge advantage in time of time to market, product market fits, etc I love that, only the brave and crazy will start now but I think that's absolutely true any last question, any advice do you have for founders out here? it's kind of the standard question like what would you tell a founder today? lots of things the most important thing about starting companies is if you're going to do it at some point in your life you should do it today because as you age not because of age but because of other forms of success it's very hard to give up what you have I call it at some point the barnacles of good life if you have a really nice car, an apartment, a family and friendships all of that will be put under pressure the Friday night that you have to stay up late because the site's down and you've got to fix it and your spouse or your friends or your life is knocking on the door and saying, come on, we got to go if you have nothing except for student loans it's a lot easier to say, well, what do I have on the other side of the door? Student loans, those can wait if you have a real interesting, complex life it's that much harder so do it now if you're ever going to do it if you're not ready, join a startup because it's the easiest way to learn it's someone else's stress but you're right in the middle of the fun and over the years I learned don't do it alone being a solo founder, which I once was is harder than it appears like you get all the control but not of the emotional support got it, all right, be brave, crazy, do it now okay, there you go thank you, Max