Downward angle icon Downward angle icon. Max Levchin, CEO of Affirm. Affirm is a buy now, pay later fintech that went public on Nasdaq in January 2021. Affirm CEO and former PayPal employee Max Levchin offers advice to founders considering going public. This article is part of “The Road to IPO,” a series that explores the public offering process from pre-public to post-public.
Media not supported by AMP.
Tap to get the full mobile experience.
Affirm founder and CEO Max Levchin always planned to take his buy-now, pay-later fintech company public, but he never expected a pandemic during one of the most economically unstable periods in history would be the catalyst for Affirm’s IPO.
“We certainly went through a period when we were not yet profitable and we needed to raise capital if we wanted to survive in what could be called a drought in the equity capital markets,” Levchin said, referring to the first months of the pandemic.
Affirm raised private capital in mid-2020 to provide a buffer, but Levchin described the process as “very cumbersome” and “highly uncertain.”
It may seem like an odd time to take a company public during a pandemic, but that’s exactly what Max Levchin did.
A “buy now, pay later” company, Affirm’s business model was built on the promise of repayment by allowing consumers to finance their online purchases. The pandemic was a boon for Affirm as Americans received their stimulus checks and e-commerce surged. Wanting to ride that wave, Levchin needed more capital to grow the company. The continued unpredictability of the private markets led to talk of going public, but Levchin wanted to make sure it was a step along the journey, not the end.
He wondered: “Would we be able to move forward from the IPO in a direction of, ‘Go faster, work harder, and invest more aggressively in interesting ideas,’ or would we suddenly get bogged down and become a sluggish, paralyzed public company behemoth?” Levchin said. Affirm’s shares went public on Jan. 13, 2021.
With the IPO pipeline starting to build again, with the impending debut of Affirm’s competitor, buy now, pay later, Klarna, Business Insider spoke with Levchin about Affirm’s IPO, where he talked about his decision-making process leading up to the IPO, how Affirm’s stock has weathered highs and lows, and some advice for founders considering going public.
From late nights on Zoom to the Nasdaq IPO
As a co-founder of payments giant PayPal, Levchin experienced firsthand the benefits of taking a fintech company public.
The process was “a lot harder than I thought it would be,” Mr. Levchin said, and it was not uncommon for him to be in 10 p.m. Zoom calls with his CFO and chief legal officer, jokingly asking them why they were doing this over half-finished wine.
Long days and late nights were spent in the second half of 2020 auditing and cleaning up Affirm’s books, sorting through numbers and documents. Affirm’s small IPO task force also had to assemble key documents, like the company’s S-1 and founder letters, while its chief legal officer and chief financial officer had to vet the plethora of bankers who had competed to represent Affirm in what was then a low-interest rate bubble.
Affirm picked three banks to lead its offering, and Levchin said the companies had longstanding relationships with Affirm before the IPO, and that he wanted partners that “understood our business at least as well as we did.”
The hard work appears to have paid off: When Affirm debuted on the Nasdaq, its shares soared 110% from their opening price of $49. Affirm’s stock price rose to $164.23 in late 2021, but then suffered the same selloff that hit technology companies in 2022 and 2023.
Levchin said a big adjustment to becoming a public company is not falling into a “quarterly lifestyle,” where milestones, product roadmaps and key metrics are split into four-month sprints.
“Going public requires a two-fold mindset: quarterly profits are important, but you can’t just focus on quarterly profits,” Levchin said of the ups and downs of running a public company. If the quarterly numbers aren’t satisfactory, “you can’t beat yourself up about it,” he added.
“If we don’t do well this quarter it will be worse, but we know we’re doing the right thing and we look at the numbers and we know we’ll be OK. If we don’t stress, it will sort itself out,” he said.
A word of advice
For founders considering going public, Levchin offered some advice.
It’s not uncommon for startups to hire a president, CFO or other executives in anticipation of going public, but that can actually be a sign they’re not ready, Levchin said.
Chemistry is important for an IPO team to be on the same page about what’s right and wrong for the business — it’s not something that’s “formed and matured during the run-up to the IPO,” Levchin said.
Levchin also warned against letting the process “eat the company.” He kept the team working on Affirm’s plan very small because he wanted to keep day-to-day operations running smoothly during this turbulent time.
With Affirm’s CFO and chief legal officer spearheading the IPO process, Levchin said he was focused on the company’s short-term and long-term plans for its capital.
“Without intentional planning, you risk becoming frozen in place,” he said.
