Letter #18: Max Levchin

Affirm's Operating Principles

Hi there! I go by KG, and I love studying the history of business and investing. I’ll be sharing some notes from one Investor/Shareholder letter per weekday (mostly from my compilations) here.

Today’s notes are on Max Levchin’s detailing Affirm’s operating principles.

If you have any thoughts on what you’d like to see, let me know!


As we grow Affirm, our ability to translate our ambitious mission (Improve lives through honest financial products!), governed by our core values (Focus, Boldness, Excellence, Transparency, and Responsibility), into a cogent day-to-day strategy becomes essential.

Truly great companies retain a deep, intimate sense of shared of understanding even as they expand exponentially. I wrote down the following operating principles to help create this shared understanding.

These are the core truths that drive decision making at Affirm.

We are building a profitable enterprise built on our commitment to honest and transparent finance for everyone.

We are here to create products and services that deliver value. Value for our users, our merchants, our partners (e.g. banks that lend us money, which we lend to our users), and our shareholders, including every one of us.

  • Company building should be a positive sum game — If you have a robust value proposition and make sure all stakeholders benefit, you will succeed (reads very similar to Peter Kaufman’s philosophy)

We want to restore the original meaning of credit, which stands for “trust” and “belief.”

Take pride in what we do. Credit is an awesome tool for efficient use of capital. Like any power tool, it can be extremely useful, or dangerous when misused – our job is to build products and services that offer the right balance of power and safeguards.

Our interests must remain aligned with our users and our partners: we will not profit off their misfortunes or mistakes.

A properly functioning financial system must have its “carrots and sticks”, but relying on users’ irresponsibility or forgetfulness for profits is not a sustainable way to create value.

  • Create value — don’t take advantage of your customers (shoutout DoNotPay for helping weed out these types of predatory companies)

We will work tirelessly to disclose our terms and conditions, in clear and transparent language, to help every user make an informed decision.

Hiding behind small print, “unspecified technical faults”, predatory same-as-cash debt-traps, and balloon interest schemes is not acceptable.

  • Be transparent — help your customers trust you

We make loans to those who we believe can pay us back, on time.

As we seek to align ourselves with the best interest of our users, we will not benefit from pushing someone into a state of permanent debt, or engage in predatory practices. And when we make an underwriting mistake, we will learn from it, and adjust our models as necessary instead of just "pricing in the loss.”

  • Be intellectually honest — don’t be predatory

We enable purchasing of items that some people may see as essential, and others as indulgent. It is not for us to judge these purchases.

If we can responsibly underwrite a purchase a user wants, it is our job to do it. We have no right to tell someone what they should and should not have, only if we are willing to take the risk in helping them finance it.

  • Never judge your customers — everyone has their own story

We will dedicate money and time to helping educate members of our community in leading healthy financial lives.

We are not a charity, but we get involved. Apps and products only reach so far. To change the system from within, we must also go directly to the people whose lives we want to improve.

  • “Be the change you wish to see in the world” — Quote often seen on bumper stickers and often (mistakenly?) attributed to Ghandi

  • If you don’t like something — go build something better and change/fix it


If you’ve got any thoughts, questions, or feedback, please drop me a line - I would love to chat! You can find me on twitter at @kgao1412 or my email at kevin@12mv2.com.

Please DM or email me any time — to share non-obvious intel, views and correct or solicit mine. I appreciate your continued support and partnership :D.

All compilations here.