I was asking myself actually a question

like why is our relationship as good as

it is and it is really good and is there

anything to learn about co-ounding

companies like you're co-ounding a

family when you marry someone you get

together with someone I've had many

co-founders over the years and some were

amazing relationships and others didn't

work out and it's always tempting to

sort of blame yourself but you obviously

have to examine it through the lens of

like what fell apart as a relationship

between two co-founders and I realized

that the secret for my marriage

is I'm still trying to impress this

girl. Every day I roll out of bed

thinking like one like how did I get

this? This is definitely better than I

should have gotten. So, the attempt to

impress your mate on a daily basis is

the secret to the best marriage.

>> Max, it's nice to see you. And I wanted

to kick this off with a thank you,

believe it or not, from what you put

into my last book, Tribe of Mentors. And

it was in response, you had several

responses to this. But it was in

response to the metaphorical billboard

question. What would you put on a giant

billboard anywhere with anything on it,

what would it say and why? Any quotes

you think of often or live your life by?

And there was one that I had never come

across because I had never seen the

movie Ronin. And the line was whenever

there is any doubt, there is no doubt.

>> Whenever there is any doubt, there is no

doubt. And I have come back to this

after watching the movie so many times

it's hard for me to even give you an

accurate account or even estimate of

account. But perhaps we could give

people some context. Why was this one of

your answers to that question? It's a

great quote. I love that quote.

>> So good. The next line in the movie,

that's the first thing they teach you.

I'm only showing off because I love that

quote so much, too.

>> It's the first thing they teach you.

It's a great quote. Encapsulates so many

different flavors, right? It's like

don't doubt yourself. The real meaning

here is you know the answer. You may be

too scared, too embarrassed, too

unprepared to sort of embrace the fact

that you know the answer, but you know

the answer. So like let's not mess

around. You know the answer. So that's

layer one. Layer two is make a decision

already. Layer three is

even if it's unpleasant, you're going to

have to do it anyway. So don't delay.

There's just like so many flavors of the

same idea over and over again

encapsulated beautifully in just a few

words. I think it's a great succinct

line. The other thing I I'm a huge fan

of

studying leadership. Fan of leadership

sounded weird. So I love leadership

related lessons. And there are two

movies where leadership I think is or

I'm sure there are more than two but

like two of the movies that I fall back

on for leadership content is Ronin and

Seven Samurai. And Seven Samurai is hard

to quote because it's in Japanese and

you can either translation unless you're

native speaker which I'm not. But Ronin

is in English and so it's great to

quote. There's a lot of other great

lines but that's the best one. And one

of the layers of explanation that you

added to it, which I ended up applying,

it made it very concrete for me, which I

think you've already done, but it was

when you aren't sure, I'm quoting from

what you put in the book here, is when

you aren't sure about a key employee or

a co-founder, odds are exceedingly low.

Your mind will be changed for the

better. And the way I translated that

for myself and I kept thinking of this

and I modified it slightly for myself

like if there is any doubt there is no

doubt just to say that if you are

analytically trying to convince yourself

of something that doesn't feel right and

you have to cross-examine that quote

unquote intuition sometimes but

chances are you know the answer

particularly at least in my experience

with employees and hires Right.

[laughter]

>> It's always I should have done that a

lot sooner, at least in my very limited

experience. You have infinitely more

experience with that. So, thank you for

that. And on the Japanophile angle of

things, having lived there. I'm still

very close to my host family who I

stayed with when I was 15. I am no

longer 15, I think some people will

realize. But I was wondering, have you

ever seen the movie Paprika? This is an

old anime. It's from 2006, I believe.

>> I don't think I have.

>> If you haven't, it might be interesting.

It will be not too much of a spoiler

because there's so much around it, but

here's the basic premise. Psychiatrists

invent a device called the DC Mini that

allows therapists to enter and record

patients dreams. And then when the

prototypes are stolen by an unknown

dream terrorist, A, B, and C starts to

happen. What's crazy about this is that

there are actually researchers in Kyoto

in Japan who have been using fMRI and

waking dream subjects to try to use

machine learning to then correlate brain

activity to content. And they've made

some surprising

progress with being able to do that.

It's still very very low resolution, but

I don't know how far away we are from

being able to do something like is

depicted in Papriko, which is pretty

crazy. I used to be a a voracious

consumer of both manga and anime and

then it turns out that time is still a

zero sum game for most things and so

I've drifted off my weekly

supply of Japanese content production

but I will definitely make room for that

one. The thing with fMRI and

brain modeling,

>> at least last I looked and before I sort

of picked to do the thing that I'm doing

now with a firm, I actually looked

pretty seriously into I'm a huge sort of

a closet fan of brain computer interface

and all sort of surrounding ideas and

opportunities. So I've looked on and off

at fMRI and all the other sort of stuff

in a domain and it just seems that your

cranium is too dense. It's hard to get

signal other than like very superficial

you know connectivity from and you have

to like shave your head which you know

you've done but

>> yeah I faced that one.

>> I'm not yet prepared. Of course you have

to experiment on yourself otherwise

what's the point? But I'm actually

pretty excited about some of the newer

things happening in brain computer

interface specifically in things like

ultrasound. I think we're finally

looking at penetrating is a is a scary

term. I I don't mean that like

physically penetrating. But getting into

few inches into your brain versus just

scanning the current of the top of the

skull is is exciting.

>> Yeah, for sure. And looking at neurom

modulation things like focused

ultrasound could hit say the nucleus

encumbent for various substance abuse

issues or addiction issues and so on. So

it's pretty exciting. That's definitely

front and center of a lot of really cool

research and I feel like we're hanging

around in the same uh [laughter]

scientific also sounds wrong but

probably hanging out in the same

circles. [gasps]

>> Yeah. I want to actually stay on the

fiction thread for a minute because I

was actually hanging out with one of our

I suppose many overlapping connections,

Luke Nosk. And I asked him what I should

ask you since you guys go way way way

back. And here's the question. This is

from him. Well, first of all, I mean,

obviously he's a huge fan. Oh, man. So

many early memories. I miss working with

him. But here's the question. And

something I always wondered is that we

all had cryptonnomicon as required

reading. So I want you to explain that.

I love that book.

>> It's a great book.

>> Went to the financial crypto conference.

Max wanted to use cryptography to make a

new money system. How close were we to

really solving the same problem as the

Bitcoin algorithm or something along

those lines. So maybe you could just

provide some backdrop here for people

who have absolutely no context to put

this together. So that was one of the

weirder [sighs]

dual track like am I in a dream? Is this

a simulation

experiences of my life? So full context.

So Luke and I were classmates. I think

it was ahead of me by a year in school,

but we were at University of Illinois

together and worked on a couple of

failed startups together there. So we go

way back. We're really close friends.

And as

we all made our way to Silicon Valley, I

hung around campus because I actually

really wanted to do research in

cryptography, which back then crypto

meant cryptography, not cryptocurrency.

But I've always thought that there's

interesting opportunities in currency to

be invented powered by cryptography. So

I I was obsessed with things like, you

know, David Ch's work in anonymizing

signatures and digash was a thing back

in prehistoric times. in prehistoric

times like what year roughly?

>> I graduated UVI in 1997. Digicash, which

was the granddaddy of all

cryptocurrencies.

I hope I'm not offending anyone's prior

art, but I I believe it was probably the

very first attempt to make a real

digital currency using cryptography. I

believe it went bankrupt in the summer

of 98, the year I moved to Silicon

Valley. I actually went to the pouring

one out on the curb party held on kind

of somewhat less explicably on one of

the picnic grounds at Stanford

University. [laughter] I happened to be

there. There's actually a really good

lesson like sort of took that away with

me to PayPal where there was a bunch of

people some people you know today people

who are very active in crypto

cryptocurrencies now but also just like

interesting famous people famous today

they're all we're all very young back

then and the conversation was around

this idea like how the world is not

ready for this yet like the digash and

digital currency like people aren't

ready 98 you know this is like 10 years

before the bitcoin paper so I'm sure

they were right but the conversation was

really around how like it's obvious

obviously the right thing to do, the

right way to do it. People just don't

get it yet. And as a sort of naive,

freshly minted computer science

graduate, I was like, well, or the user

interface sucks. It's really hard to

have this very, very slow RSA

computation happening on your crappy

laptop if you're trying to pay for a cup

of coffee. Like, it's it's just too

slow. And people are like, "Ah, heathen,

you don't understand what are you

talking about." Like, no time too long

to wait for a digital signature.

Non-repudiation. I'm like, okay, great.

But seriously, you know, like I just

want a cup of coffee. So, it was kind of

an early moment like I feel like some of

these things are not like the others.

Anyway, I had literally within days of

that event, I met Peter Teal at

Stanford. He was giving a lecture. I was

hanging around Stanford campus. Luke was

actually the connective tissue. He knew

Peter and he went to school with me. And

so, he was kind of like, "Oh yeah, like

you guys should know each other. This

was great that you ran into one

another." So, the origins of PayPal

story were literally being made that

summer. And I was still like, sure, I'm

going to start a company in Silicon

Valley doing something. I don't know

what, but I was still going to like

scientific conferences. So, there was

this one conference called Financial

Cryptography. It was held in Anguila,

which is a kind of a small island off

the sort of a British West Indies. And

there's some all sorts of interesting

characters. It probably deserves its own

podcast one day. But it it's a

interesting, hilarious, bizarre story.

I'm 99% confident whoever Satoshi is was

probably going to the same conference at

the same time as we were. But Luke and I

were there and then another year Peter

and I went there and after PayPal was

already a thing I presented something

basically saying, "Hey, so we built this

thing. It has a great user interface and

I was there when DigiCash failed." And

like I think it failed because of user

interface and this was now a couple of

years into PayPal and we were definitely

doing well and Digicash was definitely

dead and people were in the audience

going like boo you totally don't get it.

They're like okay clearly maybe there's

a reason why we're we're succeeding.

Anyway, as we were doing all this stuff,

Neil Stevenson publishes the first 100

pages of Cryptonicon. And so as we're

coding and like I'm I'm literally coding

24/7. Steam comes out of my ears every

day cuz like I don't eat, I don't sleep.

Like the six of us are just in the

office together and three of us are

basically just typing code as quickly as

we can because we have this thing we

have to build.

And the only thing we take breaks for is

we're trying to read Cryptonomicon. And

like the more we read, the more like we

think he's writing about us. The first

few chapters of Cryptonomicon is like

this development of digital currency

using cryptography. And he's like

literally talking about I think he

actually references digicashe and he's

referencing like user interface sucks

and somebody needs to build something

more user friendly. So like am I in a

dream? Is this real? remember sitting

next to Russ, one of our earliest

engineers who I also went to college

with, al another Luke Nosk friend, and

I'm like, if we didn't know any better,

this is all just like a big brain and a

bad experiment. We just don't know whose

brain it is cuz it's being described to

us in a book that's being published

online. And then we ran out of pages and

like it wasn't published for a little

while longer. Like, how will we know

what to build next? We don't have the

book anymore. [laughter] That's like the

extended cryptonomican story.

>> Wow. And for folks who have never heard

of this book, it's an incredible read. I

mean, it's in retrospect, I suppose,

quaint in some ways, but so preient in

so many other ways. Just phenomenal. I

remember ripping through that book, and

like all Neil Stevenson books, it's like

5,000 pages long.

>> This one is only 4,000.

>> Yeah. [laughter]

>> It's a great book.

>> It's so good. It is so good. My college

life was shaped by Snow Crash with

probably the thing that really put him

on the map. And I read that there was

like a dog eared version of it hanging

around one of the offices that I sort of

hung out in college and I was like this

is the most amazing thing ever. Like it

this this this book sort of shaped my at

least software engineering life and then

cryogan was the next one. I was like all

I need to do is just read more Neil

Stevenson and he'll show me the way.

There were some really long books after

which sort of were quite challenging to

to get through. But then we got to red

which was another gift. So I'm reviewing

my preferences here.

>> He's like the digital Nostradamus in the

world of fiction.

>> Totally.

>> Snow Crash for people who also are not

familiar is where the term I believe

it's where the term metaverse was first

coined is in that book.

>> He coined Metverse.

>> Exactly.

>> And those Boston Dynamics, I think

that's the company with the

cute/terrifying possibly soon to be

weaponized robotic dogs. Go check out

Snow Crash. there in that book.

[laughter]

>> So, Thorrash basically presented an

alternative to Neurommancer.

Neurommancer was this dark dystopian.

Also, by the way, first book I read when

I came to the US.

>> Neurommancer.

>> Yeah. Yeah. So, two things. So, actually

this is extremely uh Are we in a

simulation? So, I come to the US July

16th, 1991,

6 weeks, I think before Soviet Union

fails. But I leave Soviet Union and I

come into this dreamland of America. And

then six weeks later, my passport is a

passport that doesn't have a country

anymore. And so I become a man with no

state and etc., etc. Makes for an

interesting travel existence. But I'm

like an ultra ultra nerd. And I was like

the king of the nerds, you know, in in

my prior life. And this is a summer, so

I don't know

how and where I'm going to find my

people. But like six weeks go by, so a

union fails, and I start a public high

school in Chicago. And I'm sort of like

casting around for my my people. And I

run into these guys who are still really

good friends of mine and they're like,

"Oh, you're one of us. We have a word

for this. You're a nerd. It's great. You

like science fiction? Great. You love

science fiction. Have you read

Neurommancer? Have you seen Akira?" And

they're like, "No. Hasn't made it to

Soviet Union yet." I was fluent in

English. This was not a difficult

conversation to have. But they're like,

"Okay, here's a VHS of Akira. Here's a

copy of Neurommancer. Go home. Don't

come back until you've been completely

filled with these things." And I was

like, okay, like one, these these are

going to be my friends for life, which

turned out to be true. It's been 30 odd

years, and we're still talking to each

other every day. And it's the beginnings

of a completely different science

fiction consumption experience. That

said, for the next few years, I was

like, Neurommancer and everything that

came after Neurommancer is the dark sort

of plug your brain in future. And Snow

Crash offers this hilarious, completely

different, consumerist,

satirical version of the plug your brain

in versus this dark corporations rule

the world ninjas in skin suits and kill

you while you're plugged into a deck

trying to hack your way into uh some

corporations. Anyway, you're like

walking me down the memory lane to some

fun recesses.

>> Well, there are a few pieces of

commentary on that. Number one, you got

to watch Paprika.

>> I'm on it.

>> It is very adorable in its attempt

manually to do what we could do with CGI

and so on now, but it is all the more

impressive for what it is able to

accomplish with handdrawn cells. I mean,

it's just bananas. So, it's worth

checking out. Neurommancer also, and I

believe, and I'm not alone in this, that

sci-fi is a great place to go looking

for the future, but it's also a great

place to go looking for philosophy. So,

I wanted to share a couple things from

William Gibson. And these are the kind

of quotes that will stick with you.

Like, when the past is always with you,

it may as well be the present. And if it

is the present, it will be the future as

well. Noodle on that for a minute.

Right? And I'm going to get this

paraphrase wrong, but I'm going to get

it, as they say in Silicon Valley, sort

of directionally correct, which is the

future is already here. It's just not

evenly distributed. Something along

those lines. In any case, I'm getting um

off track. I want to This is You

probably weren't anticipating, nor was

I, that this was going to be like a roll

call of fiction, but I want to come back

to something that you had in Tribe of

Mentors, and it's related to books. I

asked you

what book or books you've given the most

as a gift and why. And one that I've

still not read. I'm very embarrassed to

say this is the Master and Margarita.

>> You're missing out.

>> Yeah. So, this is now on my to-do list.

I'm going to let you fill in the blanks

here, but you you said I usually buy

M&M, which even though literally five

lines above it, it says the Master

Margarita. I was like M&M's in batches

of five or [laughter]

but you give it as gifts to new friends.

>> I do.

>> You always have copies on your desk at

work in case someone wants to borrow

one. Why? What makes this book so

special? Who's the author? What's the

background?

>> It's a great book. It is well translated

by a couple of different translator

teams. So, you can almost not go wrong

buying

one of the last three translations.

There's about six that I remember exist

in English anyway. I would not bother

with the first three.

>> I think one is Pevear. I'm not sure I'm

pronouncing

>> Pevear and Balonsky is the kind of

canonical like great translation into

English. Book is obviously in Russian

originally. There's now a new one, but

Peavar Balconsky is a fantastic very

very very good translation. Anyway, it

was written by Mikail Bulgakov, who is

arguably the greatest Russian language

writer of the 20th century in my biased

opinion. There there's a lot of great

Russian language writers, so it's a bit

of a fish in a barrel type situation,

like who's a great Russian author, and

there's some fantastic science fiction

Russian authors, incidentally. But he

wrote many books, and all of them are

really good. The premise for Astro

Margarita is so it's set in kind of an

early 1920s Moscow. Soviet

revolution happened. The Russian civil

war ended. The place is now socialist

and sort of slipping into the socialist

bureaucracy building mode. And yet it's

kind of, you know, it's a socialist

paradise in the making. And so the

devil, like the prince of darkness,

visits socialist Moscow in a summer of

1925. let's say with a codery of

characters from what you would expect

devil to hang out with and reres

absolute havoc on the socialist

paradise. So first of all it's a book

within a book which is like one of my

favorite sort of plot devices. The main

character the aonomous master is a

writer who wrote a book about the last

days of Christ. It's a book about

crucifixion and it's beautifully so it a

lot of it is in the book. it's

interspersed with the chapters of the

original and obviously Abulaka wrote

both but he is very much referencing

himself so he was in Moscow during the

revolution and and on and very quickly

ran a file of Stalin and

was also because he was such a prolific

and brilliant author was Stalin's

favorite author was persecuted

ultimately asked for permission to leave

the country because he couldn't be

himself he couldn't write Stalin

apparently permitted it but then he died

before this could So this it's a little

autobiographical story of the of the

writer himself. It's a story of devil

mocking making a mockery of socialist

paradise. It's a story of Christ and his

last days on earth told by an amazing

writer both the author of the book and

the book's author also known as the

master. It would take many hours and at

some point I'd be like you know well you

should go read the book cuz it's so

amazing. But it is one of the best

portrayals, certainly the earliest

brilliant portrayal of homosveticus.

What happens to the human mind when

exposed to rampant socialism? And it is

funny as hell because having grown up

there, spent 16 years there, the

insanity of living in a socialist

paradise and yet you don't have enough

to eat. It's tragic obviously, but it's

also very funny and the book does it

amazing justice and it's like super

duper supernatural sort of science

fictiony in what's possible. There's

there are flights, there are witches,

there is a devil Sabbath, there's all

kinds of crazy [ __ ] that happens there.

It's amazing.

>> Something for everyone.

>> It's an amazing book

>> and it's shorter than most Neil

Stevenson books is at least is my

impression.

>> It's like a quarter length or a fifth of

a a short Neil Stevenson product. So it

it's definitely very accessible.

It's also incidentally, not to

overshare, it is the reason I am married

to the woman I am.

>> Okay, I'm not going to let that pass.

Yeah, please expand.

>> We met completely randomly through like

a a sheer accident and both were

predisposed to be like, who is this

weird person? Why am I talking to

whoever this girl is, whoever this guy

is? And then I thought she was quoting

Master Margarita and I was like before I

like bow my way out of this

conversation. I'm going to find out.

It's my favorite book. It's always been

my favorite book. Like how can I, you

know, not so because I know the book as

well as I do because we're speaking in

Russian. I quoted the next line and

she's like, "Oh my god, Master

Margarita. That's my favorite book."

Like no, it's my favorite book. And it's

been 27

years and two children and and a very

happy life together.

>> Incredible. That's incredible. It's a

book that many things in my life are are

owed to. By the way, to give credit

where it's due, she's the one who said,

"Oh my god, that is the best line I've

ever heard in a movie referencing

whenever there's doubt, there's no

doubt." She So, she's actually She

deserves full credit. [laughter]

>> Full circle. Oh, boy. Yeah. The brain in

the vet question just keeps popping up.

So, let's actually talk about your wife

for a second and your relationship for a

second because I was texting with

another mutual connection, Sami Inken,

who is also a absolute monster endurance

fan and we were texting back and forth

about that. I was [clears throat]

chatting with him and I know you're an

investor in Verta Health, which people

should check out also. Let me just pull

it up here because he shot me over a

couple of different options. for

questions, right? I asked him the same

thing and

I'll give you a sampling and then I'll

indicate the one that most caught my

attention, right? So, I asked him I

asked him about what it's like to cycle

with you. And he said, "Well, if you're

going to be riding with him, just know

he pretty much goes all out always for

the first 90 minutes, no matter who he's

riding with, but enjoy." And I was like,

"I'm not going to be riding with him.

Don't worry." And then he had a number

of questions. grew up a super intense

engineer now a well-rounded CEO leader.

What did it take to go from one to the

other cycling? Why did he go like fully

allin a few years back? Which is

actually kind of an interesting question

cuz I know that's been part of your life

really really consistently on a near

daily basis for much longer than a few

years. But third, this is the one that

caught my attention. He's essentially

working with his wife on sci-fi, you

know, his family office VC. What's his

advice after years of experience

regarding working with a spouse? So

that's the one that I wanted to hit

next.

>> Totally. I mean, you got to marry right

otherwise it's hard to work. Uh, no.

Well, what are your thoughts on marrying

right? If you have thoughts on that. I

do actually. I've spent a lot of time

thinking I mean I spent a lot of time

thinking about all kinds of random stuff

and this is no exception. The line marry

up is a line people use all the time and

I think that's cute and I agree with it.

I just think it deserves unpacking. I

was asking myself actually a question

like why is our relationship as good as

it is and it it is really good and is

there anything to learn about co-ounding

companies like you're co-ounding a

family when you when you marry someone

you know you get together with someone

and are there parallels and I I was

contemplating all this stuff and I sort

of realized that I mean some I've had

many co-ounders over the years and some

were amazing relationships and others

didn't work out and it's always tempting

to sort of blame yourself but you

obviously have to examine it through the

lens of like what felt apart as a

relationship between two co-founders.

And I realized that the secret for my

marriage is I'm still trying to impress

this girl. Every day I roll out of bed

thinking like one like how did I get

this? This is definitely better than I

should have gotten. So clearly

I got to work on this. Like I can't let

her find out that she married down. And

so the attempt to impress your mate on a

daily basis is the secret to the best

marriage. And I think that the good ones

are where both sides are kind of

secretly thinking, I definitely lucked

out. Like this is so much better than I

should have gotten. And so if the

feeling is mutual, you're going to go

very far together just constantly trying

to grow. And

you know, come up with new tricks, new

ideas, new know, you don't let yourself

be stale because you're watching the

person next to you grow and become more

well-rounded, more intelligent, more

successful, etc., etc. So that's sort of

the secret to our relationship and

everything I've accomplished in my life

since we've met has been modulated

by her. We keep on referring to this

her. So her name is Nelly. I suspect

many of our mutual connections refer to

her as the sort of actual reason behind

anything that I've done successfully in

my life. So and it is true. She's been

extraordinary at both calling my BS out

when when there is some and pushing me

at the you know things like whenever

there's doubt there's no doubt situation

saying like hey trust your gut make a

decision this isn't the right person

this isn't the right idea etc and so on

one fun fact after PayPal so we met in

the very early days of PayPal so that

same summer of 98 is when the seeds were

in the ground for PayPal early 99 when

we started My wife and I met in mid99,

so exactly a year after I moved to

Silicon Valley. And so she she witnessed

the entire PayPal saga from the front

row seat. After PayPal, I was like,

"Anything but financial services. I'm

going to go build some other stuff." But

like I I can't allow my sophomore act to

be in the shadow of my freshman act. And

she sort of said, you know, do whatever

you want. Like obviously you have a

right to to come up with anything, but

I'm just gonna tell you, man. That's

clearly what you're meant for. And so

like, you know, you go on. So, [snorts]

seven years later, after I've been

meandering through the desert, she's

like, you know, I think I said it

before, but I just want you to know,

like, you were really good. Like, that's

still true. Maybe you should go do what

you're good at. And [laughter]

a firm is very much a product of that

conversation. I was like, I think she's

right. I think I'm a onetrick pony. And

the trick is a good trick, though. So,

here it is. Anyway, [laughter] but

trying to impress your mate, trying to

impress your co-founder every day

because you can see the other person

progressing in front of you and get

better and smarter and more intimidating

by way of just being so much sharper, so

much more interesting than they were

when you met is a great motivator. It

makes you keeps you on your toes, makes

you work harder at improving yourself.

>> And on top of that, what have you

learned about

working with a spouse or collaborating

with a spouse? Right? Because sometimes

spouses can be often very well matched

and have a dynamic like the dynamic you

describe, but they have some

compartmentalization or separation,

right? And I've I've met so many friends

and even have some neighbors where

they've just quote unquote attempted to

retire, sort of like a failed

retirement. And then [laughter]

one neighbor was describing this to me.

His wife is also very active, has got

tons of big projects she's working on,

and he doesn't know what to do with

himself. So he'd like sit down at the

breakfast table while she's on her

laptop and he'd be like, "So, what are

you up to today?" And she was like took

off her glasses very slowly and she

said, "You know, I'm not used to

checking in with you every morning.

[laughter]

You need to get a job." So working

together is a very different thing when

you have that. And maybe I'm overstating

the extent to which you guys sort of

collaborate in that way, but any

thoughts or recommendations for people

who are entering that type of

relationship with the spouse?

>> It can definitely get hairy, for lack of

a better term, if you're not thoughtful

about it. So, you have to think through,

you have to talk through kind of what

makes sense, what doesn't.

We're well matched because I am quite

technical, have lots of interest in sort

of the technical depths of matters that

we work on together where she works on I

work on etc. And she has an extremely

strong finance background and

understands business models and kind of

the sort of philosopher of business

these days. And so our conversations are

very rarely about checking each other's

work, which is where I think you could

really end up with like why are you

nitpicking

>> checking my homework,

>> right? micromanaging.

>> Yeah. Don't micromanage what I'm good

at. And also, she's an incredible empath

and and I'm not like I frequently be

like, "So, I'm I'm dealing with this in

my day job. Why is this person unhappy?

Can you explain to me?" And and she's

incredibly good at that. And so, I think

because we are such kind of non-over

overlapping areas of strength,

>> we end up being very complimentary. If

anything, we tend to be like, "Wait a

second, we're on your stuff. Why are you

bouncing to mine? We need to finish that

thread." And both of us have pretty

active professional lives. And so we're

we are constantly discussing them, but

we don't, I think, ever run into or step

on each other's toes. She doesn't ask me

what's your token budget anymore than I

ask her, how did you make this hiring

decision? Like I I I know she's very

good at or how did you decide that this

was a bad investment opportunity?

>> I'm pretty sure she looked at it with

all the tools she's gotten, they're

better than mine. But you have to be

prepared to communicate and it does not

hurt to be direct with one another. And

so you have to be able to take on

directness without sort of like

hurt feelings and a great oneliner.

Another gift from my wife. She didn't

come up with it, but she read it

somewhere and she's like, "Here's a new

motto for our family unit. Don't go to

bed angry. Stay up and fight."

[laughter]

You guys put that into practice. Uh we

don't fight too often. Yeah,

>> but we definitely don't let

>> things fester

>> curfew prevent us from hashing out

whatever it is our differences are at

the moment. But yeah, we try very hard

not to let things gesterure and that

works really well. If you're going to

overlap

familiarly and professionally,

you better

deal with conflict or disagreement

quickly because you're acrewing areas of

negative overlap faster than most people

do. Like, I hate the way you chew, but I

love you all the other ways. Like, we

got to talk about that, but it's not an

important thing. It's like, I hate the

way you chew, and by the way, you've

belittled me by checking on my token

budget. M is like you're compounding

frustrations and marriages fail because

people just don't say out loud like

here's a thing that I'm not sure I'm

prepared to put up with.

>> Yeah. And so just got to stay up and

fight. Got to get it out of there. Stay

up and fight. [laughter]

That'll be the title of this podcast.

Max left. Stay up and fight. You

mentioned earlier time is a zero sum

game. I want to talk about

obsession and [sighs and gasps]

analysis and tracking for a second

because ultimately the question is

how do you choose what to track right

and this is pulling from a men's journal

piece that came out in 2018 so some of

it is dated but today if you can name it

Levchin has quantified it food he spent

weeks using his iPhone to photograph all

of his meals and snacks and later gauge

their nutritional values sidebar from

Tim I did that too I still can't believe

that say the Dexcom app doesn't give you

some estimate of caloric content or

macros. It's just like you ate chicken.

I'm like that's not helpful. Anyway,

coming back to sleep. As an overtaxed

entrepreneur, as the parent of two

children under the age of five, Levchin

determined his minimum threshold by

shaving 5 minutes off of each successive

night. Interpersonal relations and time

management. Lean says he once spent a

month grading every business and

personal meeting on a scale of 1 to 10

on several metrics like usefulness,

intellectual stimulation, and social

stimulation. It goes on and on. [snorts]

>> It sounds like a weirdo, but I like

that's all true, man.

[laughter]

>> So, [snorts] I've done lots of this,

too. I'm just curious how you have over

time determined what to track and maybe

what you're paying attention to outside

of a firm business metrics and things

internal to a firm and we'll get to a

firm, but I'm just wondering for

yourself outside of that company

professional context, how do you choose

what to track? I've definitely gotten

much better at deciding what matters,

what doesn't. So, when this article was

written, I'm sure no metric looked dumb.

No metric looked superfluous. I was

like, great. Counting the number of

times I trimmed my fingernails. H, what

was there signal in that?

As you age, you replace raw compute and

willingness to engage in raw compute

with pattern recognition and olude paths

that you don't need to travel down

because you know there's nothing there.

Like there's absolutely no value in

tracking your fingernail clippings or

rate they're off. So I've become more

focused on tracking sleep because

there's more and more science showing

that that's really important. Even that

I sort of used to obsess over a bunch of

metrics and I think at this point the

sort of reasonably cutting edge and you

know better than I do I think these days

resting heart rate and heart rate

variability are the two really good

anchors like if if you you know keep one

down keep the other one up you know that

predicts your recovery predicts your

intellectual capacity for the day really

well. So I track that pretty

obsessively. I try to stay in bed some

number right number of hours. I'm a lot

less obsessed with I don't need to sleep

more than X, so better be, you know,

bulleted out of bed by X plus one

second. I'm also not precious about, you

know what, I don't feel like I need any

more sleep. I'm just going to go and

tool around and do more stuff. So, I

I've relaxed a bunch on things that I

found to be less impactful to my own

life, but I have the benefit of spending

a bunch of years obsessing over

everything and deciding, well, it

doesn't seem to matter that much what I

eat, for example. So, for a long time I

was obsessed with the exact sort of a

caloric and macro targets and then at

some point I had to travel a lot more

than I used to. And obviously that goes

out the window because you can't bring

your favorite yogurt with you everywhere

you go. And so you end up like, well,

I'm just going to have to have some

fermented foods from the assortment

available in this geography. And it

turns out that basically your gut health

is like going to be okay as long as

you're having enough fermented foods

versus like the fermented food you've

selected for yourself. So you relax some

constraints and move on to spending less

time thinking about them. I track sleep.

I'm still an obsessive cyclist, so I

track every metric you can imagine. I

become more obsessive as a cyclist.

Actually bothers me a little bit, but

because I'm unwilling to believe that

I'm ever going to age properly. I keep

on looking for marginal gains by

obsessing over the exact crank length

adjustments I can put myself through

just to return some of you marginal

watts that I lose with age. I've gone

from believing that all you need is

cycling to widening my physical training

routine too. So it's maybe slightly more

brain allocated to like what's the right

day to lift heavy weights versus the

right day to not do that. I'm curious

when, and I've never asked you this

before, but when cycling entered the

picture, because in doing some research

for this conversation,

well, I can I can just pull this is

from, I believe, an alumni magazine.

Behind the curtain of Soviet Ukraine,

and then your full name, which I cannot

pronounce, is born to a family of

physicists. As a child, you struggle to

overcome life-threatening respiratory

diseases. Your parents are told you

won't live past childhood and with your

mother's urging a determined young Max

begins playing the clarinet to build

lung capacity.

>> True story.

>> So I mean that doesn't seem to have the

makings of a serious cyclist. When did

you embrace cycling and what does it

give you? Also there's an interesting

origin story that actually kind of

intertwines Ukraine and clarinet and

everything. So, I did have some fairly

gnarly respiratory stuff when I was a

kid. And I think my parents probably

were scared into kind of throwing

everything in the kitchen sink into it.

As a nice Jewish boy from Ukraine, I

probably should have played the violin,

but clarinet is a a reasonable close

second. They're like, "Oh, but lung

capacity, great, let's do that." So,

that that's how I got into clarinet.

There was like literally something that

will, you know, feed the stereotype, but

also help with the lung capacity

development. And so I think my V2 max at

the time must have been like in the

single digits or something cuz like I

remember just like trying to open up my

lungs and breathe in like it didn't

work. And then like everything else I do

like ah well I can just obsess in

measuring it. And V2 max is definitely

not a thing Soviet Ukraine really

measured but they did have like the

basic approximation like blow into a

tube and see how far you can push the

ball like all the the physics

equivalents of lung capacity

measurements. So, I was already looking

at quantify itself from a lung capacity

perspective as like a 7-year-old kid or

something. All of this while living in

an apartment complex that overlooked

Kiev's only outdoor velroone. And so my

platonic ideal of a manly man who was

like a sports phenom was these dudes who

would like get on the boards of a Kia

Veladrome and just put their watts down

and like go for an hour or two just

ripping through this thing. I was like

wow like one day when I'm not a scrawny

little kid with a clarinet I'm going to

be like that. So, I used to sneak into

the Velro when it was closed and try to

ride my bike there except the cranks

would touch the woodboards. Like, one of

the worst accidents of my childhood was

I had a giant wood splinter in my butt

>> because I crashed at the top of the drum

trying to do loops and slid down. Of

course, these weren't well finished

boards and it was outdoors, so like the

elements rained on it.

>> Probably not PG-13 after this, but

anyway. So, I didn't grow up with a ton

of sport in my life. Like soccer is

prevalent obviously in Eastern Europe,

but like cycling was right there on

display every day. Like if I wanted to

see someone who looked like just full of

life and vigor, I would see a cyclist.

And so I always rode a bike as a kid and

always rode a bike in college. And sort

of as I got into sort of busier and

busier where this notion of

how do you stay sane became an important

part of the consideration like if you're

going to work for 3 days straight

without sleep like you got to offset it

somehow.

>> You can't just like sleep it off. You

also need to do something to your body

versus your brain.

>> I sort of naturally looked at cycling

and then back to Nelly. When I left

PayPal after we got acquired by eBay, I

definitely hit like a very low point

where there's nothing going on in my

life that was worth staying up all night

for. And she pointed out that I have

this amazing bike hanging on the wall

that you know had since I think before

we met. She like why don't you like get

back on the bike and you know see see if

you can find joy in that. And and she

knew my stories of rolling around the

Kia drum. And so I got on a bike and it

was one of these moments where I went

for a ride with a bunch of people and

they were all like very serious road

jewelry as the saying goes.

>> I've never heard that.

>> If you're buying more of a bike than you

deserve to ride like that's nice road

jewelry got there. I was on like a

beater bike relatively speaking. I think

I brought it from college actually and I

sort of dropped everybody on the first

hill and I was like oh yeah I know how

to ride a bike. I have big lungs. That

clarinet really paid off. And so that

was like I should really invest some

time into getting better at this thing.

And that that's how I got into. But I am

exactly what they call a hammerhead. So

you know it's a if I see a road I can't

not go fast or at least try to go fast.

>> What does it give you in terms of

dividends just on an ongoing basis?

>> A couple of different things. So it's

definitely it's great. I mean it's a low

impact sport. So you can ride a bike for

6 hours and no part of your body will be

like in absolute shreds the day after if

you at least somewhat know what you're

doing. So it's it's a great just if you

have the time and if you're interested

in it, it's not a self-destructive

sport, which some sports are more and

others are less. This is definitely one

of the less self-destructive on the

actual physiology. Part of why I like to

go hard on the bike is it actually

allows me at least to clear my head.

It's one of the few times when I'm not

constantly playing with some work

rellated concept or thinking through

some future ideas or you know whatever.

It's a moment where sort of everything

gets tuned out and it's just me and the

the pain in the legs and sort of you're

telling yourself go harder or manage

your energy but there's not enough time

or cycles left and like also what if we

went to this market now? So it's a

moment to go into like a pure moment of

flushing whatever's left in the head and

it does keep you healthy. It's a great

way to stay alive and be healthy. And

then more and more these days, it is a

lifestyle sport of CEOs and leaders and

people who sort of read the same kind of

books. And it's another form of a

community where if you don't have the

time to sort of join

clubs and you know, I'm I'm not a big

foodie. I'm not a big drinker. I don't

have a ton of time for these protracted

social events. I try not to go to too

many conferences and yet I'm human. I

enjoy human company and so riding with a

pack of people who are interested in

similar things is is is another form of

staying engaged.

>> So I imagine that's a being near people,

not a talking with people type of

situation. If you're going as hard as I

suspect you're going, right?

>> Part of the trick is if you can still

talk and they cannot.

>> Yeah. Then you're doing it right.

[laughter]

Cycling takes place over hours and so

you can spend some time talking. There's

also the

an important part of cycling culture is

the coffee shop ride where you sort of

you hammer to a coffee shop and then you

sort of

>> everybody falls in their chairs and gets

their pinkies out and sips espresso. And

[laughter] I love coffee almost as much

as I like bikes.

>> If we have time, we'll come back to

coffee because I did dig into that in

the research. two other quotes that you

gave for your potential billboard

answers. You said if it were in Marin

County and I'm going to mispronounce

this so you can correct me, but it's

either Jen's or Yen's Voit. I'm not

sure, but you can correct me in a

second. So, two quotes from him.

Legendary cyclist. Number one, when my

legs hurt, I say, "Shut up legs. Do what

I tell you to do." That's the first. The

second is, "If it hurts me, it must hurt

the other ones twice as much." That's a

great one. It's so applicable in so many

contexts. Am I saying that name

correctly? Probably not.

>> I think it's Yens.

>> Yens.

>> I think he's East German. Yens V.

>> V. Okay, got it.

>> One of my proudest moments in the bike

is I rode with Yens a few years ago now,

but he used to hang around Northern

California. He has a lot of fans

actually. He's transcended the very

specific sport of cycling into having a

fan base worldwide because he's such a

character. The shutup legs. I own

multiple pieces of clothing with shutup

legs that I did not personally produce.

He's famous for that line, but he's very

funny. He's now primarily a commentator

in bike races, but he is a great

embodiment of this culture of endurance.

You know, pain with a smile, if you

will. Pain with a smile. Before we move

on, cuz I do want to ask you a bunch

about a firm and broadly how things

you've done with a firm reflect

your thinking and ability to see things

that others don't see perhaps. But

before we get there, I wanted to come

back to Eminem, [laughter]

this book we were discussing earlier.

And for people who are like, "Oh yeah, I

meant to write that down." on the master

in Margarita. You wrote here, just to

reiterate some of what you already said,

it's a fairly short novel, remarkable in

its exceptional depth, exploring

everything from fundamentals of

Christian philosophy to the fantastical

and hilarious satire, soulcrupting 20th

century Soviet socialism. My god, that's

really well put. Yeah, I don't think I'm

alone in watching some of what's

happening in the US and elsewhere with

respect to

this embrace of socialism or things that

go by the name socialism perhaps you

could apply other labels and while you

know capitalism is not a panacea for all

things and there are plenty of warts and

risks and you know humans respond to

incentives

as someone who came here at 15 or 16. I

would just love to hear you speak for a

few minutes on what you're seeing and

what your thoughts are.

>> I'm pretty worried, not to sort of go

all dark immediately, but I think

people without the benefit of [snorts]

questionable benefit of growing up in

the collectivist paradise to quote the

current mayor of New York don't

understand just how corrupting it is.

The ideas of socialism are amazing.

This, you know, me for my fellow men and

share and share a like and do the right

thing because it's the right thing to

do, not because there's a financial

incentive to do it. All those things

sound amazing and so it's seductive. the

idea of a workers's paradise without the

greedy

lenders, capitalists, bankers, sort of

all all the sort of things we were fed

as children or I was fed as a child in

Soviet Union. At first, Blushers are

like, "Yeah, it makes sense. People who

work hard should have more. And people

who are

great even though they're not capable of

producing valuable things in society

because they're good people should have

everything that I have even though I am

working harder than they are. And those

things sound pretty good, but they

inevitably require a bunch of structural

change that just does not work thanks to

human nature and many obvious things

>> like it. For example,

one of the greatest kind of mental

images I have from growing up in Soviet

Union is if you went to a

governmentowned store, and every store

was of course owned by the government,

you would very quickly notice that the

people whose job was to sell you things

from behind the counter were always very

fat

>> while everyone you knew in your life was

always very skinny. And you sort of like

this doesn't make any sense. like how do

these people who happen to work in food

stores are always really well fed? It's

like, well, because they're stealing,

like they get access to the food. And it

expands that notion of this idea of

everybody just pulls all their work

product into one big pool and then

someone's in charge of fairly

distributing it to everyone who needs it

from each according to their abilities

to each according to their need. Is kind

of the socialist/communist

motto. And it works great except people

who are doing the actual redistribution

get to keep a lot for themselves. And

doesn't matter how

honest they begin that journey, by the

time they get to real power, they become

profoundly corrupt and steal and keep

and redistribute primarily to

themselves. And so that alone is just

like an indictment of socialism that you

cannot get around. It gets worse because

markets, free markets, capitalism, you

know, whatever term you want to use,

inherently forces competition. If you

believe you have a thing that you can

sell at a lower price than the other

guy, you get the market's attention. You

get the business that's available to you

because the thing is worth buying by

someone, you're going to work on

creating a margin for yourself by

lowering the cost of production, finding

efficiencies, finding some ways of

making the thing cheaper for you. and

we're cheaper for the buyer so you can

compete on price. So all those things

cannot do not exist in socialism because

it's all centrally planned. We're going

to make this many widgets and then we're

going to have someone redistribute them

to all the right people full stop. And

what happens is there's never the

pressure to improve and so you always

make stuff at the governmentmandated

cost and the governmentmandated

price is what's being used to sell it.

And so you have natural stagnation. You

have a system that rewards graft, gives

power to people who are most likely to

become

graphdriven

and prevents anyone else talented or

otherwise from trying to innovate and

improve the efficiency of the system

itself. And so it just does not work.

And the thing that worries me in the US

and and the world, this isn't unique to

to us here is the headlines that make

you feel like, "Wow, I would love to

live in the world where everyone is fed

and everyone gets more or less the

baseline of good living is very

compelling. Like it it is easy to agree

with. The recipe for that remains to be

the best recipe we know, the best recipe

we've discovered as humanity is

capitalism. a force for constant

creative destruction where you build the

next thing better than the other guy.

And yes, his business may be put out

because your business thrives, but the

beneficiary is the buyer or the the user

of the product, the buyer of the widget

because you're constantly working to

make the whole thing more efficient. If

you eliminate the ability to or you

eliminate the need to create

efficiencies, you just stagnate. And the

death of Soviet Union was surprised to

exactly zero people because we knew as

people who lived there more than most

that nothing ever changed for the

better. Like everything was the same

price, the government mandated price.

And we were still using phones that

looked like they were made in 1950s. And

when I moved to the US like, "Oh, you

have buttons on your phones? That's

amazing. Like we still do

>> like the the clickity rotary."

>> Yeah. Yeah. And so anyway, I can't say

enough how the seductive story of

socialism really appeals and I can

understand why. But [snorts] you know,

if I if I didn't have my day job, I'd

spend a lot of time screaming from every

street corner, don't don't fall for the

trap. It's a surefire way of getting to

no progress at all.

>> So a firm, you know, on some levels is a

I don't want to say response, but it's a

solution that replaces potentially

predatory practices, right? And we're

going to get to that, but I'm wondering

how you would explain the current

apparent wellspring of attraction to,

just to keep it simple, socialism in the

United States. Are there structural or

systemic problems that have contributed

to that? Is it mostly sort of demagogues

using whatever talking points they think

they can

leverage to attract votes, etc. What is

the cocktail? What are the ingredients

in the cocktail that are contributing to

this current phenomenon in your mind?

>> I'm confident I don't know every strand

of this particular disease. So, it's

it's a complicated issue and

>> I think

it is definitely the case that the

brochure looks great. The storytelling

of do you know someone who's poor? Do

you know someone who deserves better? Do

you know someone who's been laid off? It

is the case that capitalism can be

profoundly unfair at least to an

individual as as a system as a way of

improving the world. It works amazingly

well. We've not created anything better.

But you get thrown off the bus if you

build something that gets outmoded or

out competed by another participant in

the market. And it can hurt. And for the

entrepreneur, it looks like failure,

which we are wired to accept, but it

still hurts. For a worker, it looks like

being laid off, which could be

catastrophic for a family. For people

who sort of misinvested their money or

something went wrong, it doesn't taste

good. And so, the idea of social safety

net, the idea of welfare

is natural. You hate seeing your fellow

men and women starve or not do well. So

I understand the definition of the

problem and the notion of income

inequality and like all the things that

we see in Silicon Valley firsthand is

very real. It's not like how are you

complaining like there's a lot of people

who are not doing well and every new

disruptive change from you know the

industrial revolution to the AI

revolution there's always someone on the

receiving end of the efficiency because

their work is no longer required or

their products or their ideas are no

longer relevant. And so socialism is a

compelling story of how to protect those

people, how to prevent them from

suddenly being on the outskirts of

society or worse. And I think there's

definitely a lot to do to make sure we

don't leave our fellow humans behind.

Certainly my love of capitalism and free

market does not obiate my humanity. I

care about people just because I am also

human and I see it as part of my job to

ask the question, can we do better? Can

we provide the social safety net for

everyone? We're creating more and more

efficiency. We're creating more and more

value. There have to be ways of helping

people who are thrown off the bus to

make sure they don't end up in the

gutter. And I happen to have some

solutions that I love and solutions that

I think are worthless. the idea of let's

concentrate it all in the hands of the

government, give a handful of people the

right to redistribute it all and we'll

do better doesn't work and I lived to

tell the tale. I do think that things

like philanthropy is profoundly

important and the more disruption we're

going through as a society the more

important philanthropy becomes. And I

think in that sense I'm not an

especially outwardly religious but I

think religion provides a really useful

set of frameworks around how to think

about it. You know, every organized

religion has a version of what it means

to be philanthropic. And the older I

get, the more I start respecting the

thought that's sort of been aggregated

over the thousands of years that most

religions existed. So I think that's

super interesting and important and

worth

participating in.

On the other side of it is I think

capitalism in particular has created

opportunities for products to develop

where the sort of optimizing up and to

the right of the most profit at lowest

cost ends up building products that are

actually devolved from not just their

economic platonic ideal but societal

ideal. And I don't think we have to

compromise by saying well you know what

I don't actually care that this is

harmful to someone because it's the most

profitable marketefficient thing to do.

And my theory for a long time has been

that you can build products certainly

financial services that are optimal not

just from the lens of most profitable

but also most society beneficial. And

that's not uniformly distributed. There

are plenty of products that look like

predatory lending and all the other

things or just sort of make money

because the underlying customer doesn't

understand what's going on, doesn't have

the capacity to deal with the complexity

of the math involved. A firm is the

answer to that question. In some ways,

what we are doing here is trying to say,

look, you can optimize a product beyond

just making the most money. In fact,

it's okay to make a little bit less

money if you are able to create

something that's society more

successful, more important because in

the long term, I think you will have

retention that consumers will not go to

a cheaper product or a product that is

less profitable for shareholders because

it's so societally important. And so I

am to at least some extent embracing the

ideas of pro-social product and

engineering. I just choose to do it

strictly through the lens of capitalism.

>> I'd like to go to early early a firm,

right? And this parallel to PayPal,

which looking back at say early

fundraising for PayPal, it wasn't

exactly like every door at Sand Hill

Road was opened with a red carpet,

right? I mean, it was incredibly

hardgoing. People were like, "Yeah, no

way. Possible. Not going to work." I

mean, I've had conversations with Reed

Hoffen about this just like, "Yeah, no."

Like, at every turn, no chance. And I

mean ultimately with Peter pulling from

the hedge fund and stuff I mean it's a

hilarious story and incredible a firm

you know early on similarly right it was

not obvious a lot of folks would be of

the opinion credit cards just fine late

fees too profitable

and what I'm wondering and this applies

elsewhere to your investing and

involvement with companies like Yelp and

so on.

What are you seeing? What gives you

confidence? And of course there's a bit

of a in the phrasing of the question a

survivorship bias. I mean but so putting

that aside for the moment what gave you

we could use affirm as the example but

like what gave you the confidence to

keep driving? What did you see that

other people didn't see or what were

assumptions you made or hypotheses

that you felt just were worth continuing

to hammer on and test because you had

some degree of confidence. And what does

a firm do? Maybe you should explain that

first.

>> Well, there's this acronym BNPL, buy

now, pay later. We kind of invented the

genre about 15 years ago. And the basic

idea is at the point of sale, most of us

pull out a debit card or a credit card.

And those who pull out a debit card

generally speaking, think themselves

financially responsible and think, you

know, if I can't afford it, I'm not

going to pay for it. So, like, if I

don't don't have enough in my bank

account, just not going to buy right

now. I'm going to save up or maybe buy

something cheaper. If you pull out a

credit card, the minority of us who are

for all intents and purposes are

independently wealthy just say, "I'm

going to put on my credit card because

it's easy, and then I'm going to pay it

off at the end of the month, and I'll

get some free float on that, but I'm not

going to pay interest or pay over time."

There's a huge percentage of Americans

that pull out their credit card and say,

"I'm going to add it to the giant pile

of revolving debt that I already have

and I'm going to pay interest on it and

I don't really know how to calculate

that and I have no idea when I'm going

to be out of debt, but I need that thing

and I'm not disciplined enough to pay

for it with cash or I just don't have

the cash and I need the thing." And

sometimes the thing is like, well, I

need a new bicycle which we can maybe

postpone and sometimes the thing is

like, I need a pram to put my baby in

and yeah, I'm just going to have to buy

it one way or the other. And so the idea

of a firm was and is and it's worked

amazingly 15 years in that what if there

was a third way where what if you could

have the same transparency and

responsibility and clarity of a

financial decision-m with a payover time

product that you do have with a debit

card. So, what if we added the idea of I

want to pay for this over time, but I

don't want it to revolve and I

definitely don't want to be confused as

to when I'll be out of debt. Essentially

turning every transaction into a simple

plan. Pay for my baby pram for over 6

months, let's say $100 at a time,

doesn't break the bank. Exactly 6 months

out, I'm done. That's it. Not revolving.

I'm not paying any more interest or or

anything like that. And as we sort of

described the idea sort of thought well

like if you're going to do it right how

about you build it so that there is no

revolving possible there's a fixed

schedule only that every transaction is

pre-ric if you're paying interest you

know exactly how many dollars of

interest you'll ever pay even if you

take longer that can't change that

shouldn't change and if you're late

there shouldn't be any late fees like

you should just be motivated to pay us

on time because if you take too long and

you're late all the time maybe we won't

lend you next time. So, it's sort of

almost like a too simple, too black and

white a way to lend money as an

alternative to credit cards, which is a

very long way of answering the question.

But, it is available now at threearters

of all e-commerce checkouts in the US

and Canada and rapidly expanding into

UK. And we've announced we're going to

go to a bunch of European countries and

there plenty of competitors to do the

same thing. But we were kind of the

first I think there were some obviously

logical and spiritual predecessors to

this idea but we sort of purified it

down to no fees, no revolving, simple

schedule, everything is pre-priced,

everything is super transparent and this

year we'll do almost $50 billion of

these transactions. So it's worked out.

>> Seems to be working.

>> It seems to be working. We publicly

trade it quite profitable. Have been

profitable for a bunch of time. the last

10 quarters we grew 30 plus percent

year-over-year or faster. So, it's like

it's both very big, growing really well,

still never charged a penny of late

fees, never charged a penny of revolving

interest. So, we're still true to the

idealistic nature. And so, as I was

describing the product, I talked to a

bunch of banking people who laughed at

me like, "Okay, dude, you don't get it.

You've obviously never lent money for a

living. Late fees is where the profit

is. Half the profit comes from late

fees. So, like, you just cut your

profitability opportunity by half. So,

putting that aside, if you don't

revolve, what are you going to do when

people take too long to pay you back?

You want them to take forever. You want

them to make minimum payments so the the

principle keeps being big and then

interest will compound into principle.

Be amazing. Like, yeah, all that sounds

crappy. Like, none of this sounds

transparent. None of this makes any

sense. And people in Silicon Valley who

generally speaking don't need these

services don't get just how significant

the cost is on your regular consumer

that doesn't have a seven-digit salary,

etc. And so as I was sort of trying to

raise money for this idea, I would talk

to people, you know, VCs and they're

like, I don't know why why can't they

use their platinum AMX? Like they don't

have a platinum. [laughter] Like, yeah,

like why why don't they get a platinum?

I'm exaggerating, but only slightly.

>> Right. Right. Right.

>> Anyways, the difficulty raising money

for this financial services company,

unlike PayPal, was I couldn't convince

anybody this was a a thing that normal

people would use.

>> How did you land on this, though? Like

how did you even get to the point where

you're like this is the deck I'm going

out with and this is what I'm pitching.

>> So the earliest version of this thing is

actually pretty funny. So

a bridged since it it's a colorful story

and actually Luke is involved like weird

Luke makes another appearance.

>> I like colorful stories. We're not in a

too much of a rush. Yeah. Take your

time.

>> Right after PayPal went public. Luke and

I I mean Luke is a wild and crazy guy.

You've met him. [laughter]

I think he talked me I'm going to go

with he talks me into. But I'm I'm

already dating Nelly and I'm trying to

impress Nelly. I'm still trying to

impress Nelly every day. But I decide

the way to impress Nelly is to get a

really cool convertible. And so Luke and

I like find this convertible. Mercedes

just launched their first hardtop

convertible. So we fly to LA with a view

to buy these two identical like we

debate. We can't have the same color. So

we need to like take we anyway.

[laughter]

So we get to LA. We go to the dealership

like, "We want to buy this cool hardtop

convertible from Mercedes, like a

mechanical folding hardtop." So, it's

like a thing that like transformer car

becomes a hardtop or a convertible if

you press a button. Super cool. So, we

got there and they're like, "Okay, Mr.

Nosk, here's your auto loan. Go. Here

are your keys. Mr. Leftchin, your credit

sucks, so we're not going to sell you a

car today." I'm like, "Wait a second. We

like literally just took PayPal public.

I'm okay. I've paid off my student loans

and everything." like, "Yeah, but your

credit score is really, really bad. So,

if you want to buy a car today, you're

going to have to wire the total amount

of money." Which is like, "My future

wife then girlfriend is like," oo, okay,

you didn't tell me that part of your

biography when [snorts] we just started

getting to know each other. What did you

do? Like, I started this company in

college with Luke Nos like who's in the

room. He knew and I didn't that if you

don't pay your credit card bills on

time, it'll come and, you know, show up

on your permanent record. So anyway, I

had to in fact wire money and like as

this dealership was wrapping up of the

day, they're like, "Oh yeah, we finally

got your wire. Okay, here are your

keys." So we drove from LA to San

Francisco on five, basically racing each

other at some ungodly speeds and got

pulled over at 2:00 in the morning and

the cops were very upset with us, but

actually let us go because they were

similarly fascinated by these cool new

cars. So, we didn't actually get into a

lot of trouble, but got into a minor

amount of trouble for going way too fast

at 2 o'clock in the morning. But the

story stuck with me because I mean, I

was fine financially, better than fine.

I was my mid20s and just, you know,

never needed to work a day in my life.

And yet, the car dealer who knew who I

was, he looked us up. He was like, "Oh,

yeah, I know you guys. You're PayPal

kids. Cool. Yeah, you can buy a car.

Sorry, your credit sucks."

And like, why does my credit report or

my credit score not reflect the fact

that I'm basically independently wealthy

now?

>> And that really stuck with me. And so I

had this a version of this conversation

including the And then Luke Nosk had a

sweater wrapped around his head because

it was really cold on five middle of

[laughter] the night and cops were

really worried about him anyway. And so

the story comes up or came up over and

over and over again. And I was like, I

should do something about this. Like

there's got to be a credit score to be

built around like came to the US as a

teenager with no record of any kind and

$600 for a family of five and now

independently wealthy Silicon Valley

entrepreneur. Like it was like a five or

sevenyear window between those two

events. So it's it's not weird, but it's

super weird. Seven years. Like hello, I

got a computer science degree. I was

imminently employable. I started a bunch

of companies. Not all of them failed.

and why it did not catch up to me at

all. In fact, it seems to have had no

bearing on my ability to borrow a fairly

modest amount of money relative to, you

know, everything else. And I that's been

like sloshing around my head for years.

And I finally sat down with another Luc

friend from U of I like what if we built

a better credit score and so like yeah,

it wouldn't be too hard. So like all of

us are CS majors. We all have some

number theory background, therefore

machine learning, therefore AI. And so

we built a score and it was like just

use some publicly available data a

little bit sort of some other secret

sauce. We built a score and like oh well

now we should make people lend money

using our score because it's cool. And

so I talked to some bankers which how I

began the sort of like oh you're doing

it wrong kid conversations and like yeah

no one's going to lend money using a

score that no one else is lending money

against. What if it's a bad score? What

if it doesn't work? And so if you tell

an entrepreneur over and over again this

thing will never work unless someone

does X. The natural response is, well, I

will do X and see if it works. And so

like, all right, I guess we're going to

lend money. And so like, I'm just going

to go and get into a lending business.

At which point I was like, oh, I got to

understand how this stuff works. I've

never actually looked at lending very

carefully. And that began the journey of

like, okay, so how do credit cards

really work? How did I manage to mess up

my credit at the ripe age of 18 by

missing three payments? How did that

happen? And so

a year later, I was like, "Oh my god,

this whole thing is so broken and no one

even knows it." Revolving on a $1,000

draw and finding yourself with a $3,000

debt a couple years later and you can't

explain it or getting a 0% loan but not

realizing that if you're a dollar short

or a minute late, it will compound

retroactively from the time it was

written to you. So there all these

things that the industry built over the

years that are just profoundly anti-c

customer. It's one of the only

industries in the world actually like a

great way of thinking about it. I think

I heard someone else explain this to me

this way, but it's the industry where

you and your service provider face each

other and you're like, "Hey, I want to

borrow some money." Great. I'm going to

bet on you failing. I'm going to

[snorts] give you a loan, but I want to

believe that you're you're not going to

fail completely, but you're going to be

really late. Ideally, you take forever

to pay the loan back because I make more

money that way. Optimally, we sneak in a

few things you don't notice. And it's

all in a fine print, but I hope you

don't read it. It is a very, very

strange vestigial

like capitalism supposed to get to