When I buy a mattress online, I pay for it with my credit card. Behind the scenes, a complex series of transactions occur between a payment gateway, the credit card company, and a few banks. There are problems with this process–it is slow, complex, and involves the synchronization of several different parties.

Some consumers will not want to purchase the mattress because they do not have cash, and the lending rates they get offered are higher than they are willing to spend. If these consumers were presented with more intelligent loan rates, the lender could still make money, the mattress company could still make money, and the consumer would get a new mattress. It’s a missed opportunity all around.

Affirm is a consumer financial services company. Their first product offers loans to consumers making purchases. In today’s episode, Affirm CTO Libor Michalek explains how Affirm decided to build this product, and what they have done to scale it.

The conversation took me by surprise. Affirm was started by Max Levchin, who was a co-founder of PayPal. I assumed that when Affirm was created, they already knew exactly what they were going to build–because Affirm is a payments company and Max has had knowledge of the payments industry going back two decades. In reality, Affirm started out with more vague ideas around what they were building.

They spent some time running small experiments as they looked for product/market fit–just like a bootstrapped startup would have. It was inspiring to know that even an experienced team is willing to go through the humble process of searching for a product within a space they are deeply familiar with.

We didn’t get to all the questions I was planning to explore, but I hope to do another show about Affirm in the future.

Affirm Careers Page

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