a16z Podcast - a16z Podcast: Building Affirm, and Why Max Levchin Has Watched Seven Samurai 100-Plus Times

Episode Date: February 5, 2016

Max Levchin helped build PayPal. Then he went onto tackle gaming at Slide. Now he’s back in the world of payments and finance with his latest startup Affirm. a16z’s Angela Strange talks with Levchin about Affirm’s opportunity in the world of finance, and how it aims to build trust among a customer base that doesn’t trust banks. Why building models around loans requires making bad loans, and finally, why everyone should start watching Kurosawa’s "Seven Samurai" -- over and over.

The content here is for informational purposes only, should not be taken as legal business tax or investment advice or be used to evaluate any investment or security and is not directed at any investors or potential investors in any A16Z fund. For more details, please see A16Z.com slash disclosures. Welcome to the A16Z podcast. I'm Michael Copeland. Max Levchen helped build PayPal. Then he went on to tackle gaming at Slide. Now he's back in the world of payments and finance with his latest startup, Affirm. A16Z's Angela Strange talks with Levchen about a firm's opportunity in the world of finance and how it aims to build trust among a customer base that doesn't trust banks.

Why building models around loans requires making bad loans. And finally, why everyone should start watching Kurosawa's Seven Samurai over and over. Angela Strange starts things off. Why don't we start by talking about a firm and payments, finance, an area that's quite complex that you spent a long time in. And oftentimes entrepreneurs that have built successful companies in one space say, hey, that's enough. And you made a foray over to slide. And now you're back. So what is it about the idea for a firm and a firm specifically that really got that passion that I need to spark this, that I need to solve this problem?

There's sort of two parts to that question. One is sort of why back to finance, and my wife explained it to me. I couldn't actually figure out what went wrong with Slide, which did very well financially, but was never quite the real catch for me, and affirm as, you know, I'm wallowing in my daily pleasures of running this company. And she, unfortunately, I don't know if she meant it as a compliment. So you're a very serious person. Spend most of your formative years building a payments company that became the payments company in the internet. And that was a very serious task.

And you fought fraud and it was great. And then you went off the deep end and had to build a games company and look at you now. Back to serious things. You are just not that guy who makes funny games. So I'm probably back where I belong, at least according to her and I tend to agree. The kind of more interesting question, why this part of payments, why this part of sort of a series, universe. And the answer there is the FICO score that drives the credit decisioning. It's essentially proxy for how much limit you're going to get. If you're going to get a credit card, what terms

you're going to get, all the different decisions by even the most sophisticated lenders and banks are largely driven through this magical number called the FICO score, which was invented in the 80s or even late 70s and has really not changed that much. Certainly has not been, but been adjusted for the notion of the gig economy. You know, it was invented well before people changed their jobs more than a couple of times per lifetime. And so there was always this moment when it would start creaking under the changes to the world we live in, and it really hit hard right after 2008 financial crisis because young

people that were coming of age entering the workforce starting to consider their first sort of contemplated purchases would say, oh, this FICO score, and they didn't necessarily know what the name was, but they would say, well, why am I getting these terrible rates? Why can't I borrow money? Why do I have to get a credit card where I can't even understand, let it uncalculate what the APR is? And as I was sort of watching all this stuff and reading the research on it, because of a serious person I read this kind of research before bedtime, I start to think that there's probably an opportunity to just build a bank of the future for all these 18 plus year old people, and which is how we wind up with a firm.

So talk specifically, lots of different ways that this problem could be tackled from the lending clubs on the consumer side. There's a bunch of the on deck on the business side. You've chosen a pretty specific angle at a firm. Talk. What does a firm do exactly? So a firm, first and foremost, is a purchase finance service. What we do best today is integrate at the online and just launched offline literally a few weeks ago, point of sale where as a typically a young person comes in and says, I would love to buy this amazing looking Casper mattress on casper.com.

It is a bit expensive. It's $800 and that's not really something I'm going to put on my debit card. And I don't have a credit card because I don't want to have a credit card. I could do it, but I just don't trust these guys. And so I'm going to go home. I'm going to be a window shopper and probably going to wind up sleeping on a floor for an extra couple of years. Until you notice that on that page it says, or you can split it into six payments as low as probably in this case will be,

along the lines of hundred and something dollars I'm trying to count. There's a lot of restriction to what you can and cannot say, so I'd rather not be quoted to misquoting my own. Try, buy mattresses and taxes for themselves. You absolutely should one of our favorite merchants is Casper. And

so you notice that there is this extremely obvious, very transparent, potentially framed payment plans available on Casper. And it resonates beautifully with the young shopper's mind where they say, oh, no card, no complexity. The interest is pre-calculated.

Very important. We disclose the interest both in the rate and dollar terms. The approval is instant. There's no weird hang on while we go and play around with your credit rating. We don't do a hard pull, as they call it in the industry. So you don't really, we don't ding your credit record. Figure out what the rate will be and disclose it very clearly. And then you agree.

And within 24 hours, Casper tells you, okay, it's on the way. or within seconds because they get from us a notification that we approved the loan, and it goes. So we basically help people finance these considered purchases something north of a couple hundred dollars all the way out to several thousand dollars. And it's grown pretty significantly at this point. We have several hundred merchants live and several hundred more integrating. It has a pretty amazing impact on the merchant themselves. We see about a 30% increase in sales for most of these merchants,

really all about window shoppers converting into buyers by way of saying I can't afford $1,000 overnight, but I can certainly afford $80 payments over the next year or so or a year and a half. And so that's been our bread and butter for a year and a little bit now, and we're just starting to branch out into the next set of services in our plan to build a sort of comprehensive financial system for the young people. You talk a lot about young people, and you've been the one. that's been touting a lot of these stats and just some of them, like, they see banks as completely undifferentiated, millennials would rather get their financial services from anybody

except for one of the banks. The really surprising stat to me was that two-thirds don't even have credit cards, and then generally they just hate these brands. So do you think that there's an opportunity to build a new brand? It's not that they hate bank brands all the time indefinitely, it's that they don't like these bank brands and are really looking for what's that next thing that's going to be fast, transparent, mobile, some of the characteristics of a firm that you talked about. Yeah, I think that is the opportunity.

I think the opportunity of the day is to build this nice loan book. We have very sensible set of merchants, a lot of very cool young startup merchants use us because it resonates well, it was their customers. But the long-term opportunities to really build a trusted brand that speaks to what these young people expect because they don't expect anything good from. you know, fill in your favorite top 10 bank. One of the best stats is a, in the millennial disruption index study, which was a giant survey, they, I think for fun, basically said, you know, list your top 10 most despised brands,

top four one of being banks. So they're definitely not well liked. And there's a couple of reasons for it. Number one, the notion of you have to go to a branch to certain things is completely anathema to a lot of what people think of convenience these days. But two, kind of in a more sour or darker note, a lot of these people were in their formative years in 2008, and they witnessed what happens when a bank of that scale is squeezed by their own bad decisions, the government's bad decisions, it doesn't matter whose fault it was. They ultimately, many of them didn't stand behind their customers in a way that they had advertised or talked about. And so as these houses were getting sold short, as their credit card limits were cut, as people were being told, sorry, we're going to.

have to pull your line even as the consumer wanted that line the most. They walked away with a pretty strong muscle memory of that's not your trusted partner. The corner bank is not really the corner bank. It's got national brand and it's just not on our side anymore. So I think that that's the opportunity we're really looking out today to build the equivalent of a great American bank for the next generation. Interestingly enough, there are really two brands that survived, two banking brands that survived 2008 financial crisis really pretty much intact. One is American Express, which I think is probably one of the best financial institutions out there, but they have not figured out how to market to young people at all.

There's really not that much cool left in the black card if you're an 18-year-old. And Visa MasterCard have successfully chipped away that by issuing their own Visa Black and all the stuff, Sapphire cards, things like that. But the other one that's fascinating, kind of a spiritual guideline for us, is USAA. They're far less known, but they're the armed forces serving bank, and they gained customer traction during the crisis. They stood behind their customers. No question was asked. They would help people refinance loans, even if they were in dire straits. They would give them incredible treatment during the time people would lose their jobs or had to deal with some sort

of personal tragedy. And even though they probably lost short-term revenue opportunity, they ultimately made an unbelievable number of people very loyal to them. So every time we sort of ask ourselves. What is the right next branding move for us? We sort of search for a precedent in the USA's history. Let's talk a bit more about that. Many of you have seen the stats. I think there's been something like $30 billion of financial capital that's gone into the fintech space in the last two years. We are proud investors of a firm. One of the popular terms right now is disaggregations of the bank. And you can see a lot of these images on Google, Look for banks' website, point to any product that they offer, and you can see five to ten new startups that are hitting each area.

Take wealth management. You've got the term now with robo advisors. Instead of paying to your financial advisor, a larger percent, you pay a small amount to an automated robot that will put you in funds that don't cost you as much. If you want to go for your consumer loan, there's a bunch of different companies you can go there, business loans, a bunch different there. you could imagine this world where every time you want something different financially, you're going to a totally separate company. Or there's a world where like a firm, you're starting with point of sale lending, you've moved into student lending. Do you see that banking is going to progress as really a big disaggregation or that it's just starting as being disaggregated, but someone's

going to come out on top and build a really trusted brand and be able to provide more and more those services? So I think both things will actually happen. The search Google find service, fulfill service is a very transactionally oriented relationship. If you need to refinance your existing credit card debt, it behooves you to shop for a good rate. And Google is as good a shopping tool as you can find these days.

So, or perhaps more specialty tools like credit karma, you would go and search for a provider that would make you feel like you're getting a good deal. It's not something that happens all the time and you don't really, hopefully you don't refinance your credit card debt all the time. And so once every end months a year, sort of an event, I can see that being permanently deconstructed into these extremely efficient, very thin once transactional service and then you're done and you feel very good about sort of satisfying you need. There's definitely going to be several probably winners that take the spot in your brain that belongs to Wells Fargo for your parents. The sort of a place where your money goes into a direct deposit account of some sort

that takes care of your billing mostly automatically, except they do that very poorly. That's where you get your card. That's where you get your checks are probably hopefully going to go away. But the sort of the modern equivalent of a checking account is automatically bill paying will happen from that. And I think that's going to be something that will probably remain a branded monthly, weekly relationship, something that happens to be a part of your life. Now, the interesting opportunity there is if played correctly, and we're certainly in competition for that, the opportunity there is not just to be the thing that's in your head and you're using it every day, but the thing that in your head that you know is your trusted advisor is

actually your helper. And then that may well be the jumping off point. for, you know, where do I get my best terms for credit card refinancing. And the efficiency of those services might still propel them forward in their own little transactional ways, but you probably would start in a place where you have the trusted relationship and also where your money goes from your paycheck. So that's the, I think that that's really an interesting opportunity. That's also where we're playing. One of the things I think is really special and unique about a firm is how you're fitting

into what we like to call the on-demand economy. We used to live in this world of planned purchases. If you wanted anything, you needed to think about it at least a week in advance. And now with your mobile phone, you want a taxi, you call Uber, you want food, you've got 200 different companies, you can deliver a meal in 15 minutes. There is actually four different startups that will come fill up your car with gas on demand now. Moving to a fairly large extreme. And I think with finance, it's also moving that direction. And you talked a bit about it, about I'm going to go buy my mattress. Oh, shit, it costs $1,000. I'm not going to buy my mattress, a firm to the rescue. You've just moved into student loans. It used to be, I'm going to plan for four-year colleges. Now I can take a three-month coding boot camp. I don't have three months to plan for loans. I need my money right then. How do you think about, like, being customer acquisition, being at that critical point of need as part of the establishing that relationship with customers versus trying to drive.

drive people into a branch the old school way. Right. So that's entirely essential to how we're growing, how we're, what would we do? The partnership we have with our merchants and at this point, that's a very stretched definition because alternative learning platforms are merchants in our system and we have all kinds of other interesting verticals that we're working on. But the provider of service or product that encounters that consumer typically tells them about us as they're considering the purchase.

us. In most cases, the conversation doesn't start on the checkout page when they say, well, these are a master card. It's the, you probably can't afford it, but we have an installment plan available to you, and we trust these affirm guys. They've done good for us. They will treat you right. And so that sort of kicks off the relationship building process where they found out about us. And we are introduced to them under the umbrella of the brand, who basically vouches for us. They wouldn't put us on the product page, on the front page, and sometimes in their email drops, unless they thought we're providing a good service. And interestingly enough, there's a sort of implicit indictment of the larger banks that do what's known as point-of-sale issued credit cards, which is, you know, somewhere borderline evil product because they give you a 0% financing unless you miss the first payment, at which point becomes maximum available, maximum possible by law, compounding from the point of purchase. and it's kind of a pretty awful product, practically speaking.

And those are very rarely promoted in giant print because merchants are vaguely embarrassed by them. They do drive incremental volume, so they are useful, but they're not exactly something to be proud about. And we typically show up under the rubric of these guys are not just good, they are the enabler. They're the unlocker of a whole new segment in a market that typically couldn't afford this stuff.

And so that's the sort of a handoff point and absolutely critical portion of what we do. It requires that we hold ourselves to an incredibly high service standard on both sides of the equation. We can't tell the merchant, hey, we'll do all these marvelous things for you. We'll approve lots of people and then say, yeah, actually, we're not. Nor can we tell the consumer, here's your rate, it's precalculated, we'll never change your interest, and then do something else. So part of the difficulty or challenge of doing our business, we are constantly being held to a very high standard of service and even more importantly,

high standard of transparency. Big part of our trust building exercise is from the point of discovery as the consumer says, oh yes, I would absolutely love to do an installment pay over the next 12 months.

We have to instantaneously tell them you're approved and here's how much and here's your rate and here's how many dollars and we are not just going to do all of this for you. We're going to start reminding you so you're not late. And if you're late,

we're not going to charge you, lead fee because that's our fault. We didn't remind you correctly. And when we made the underwriting decision, we made the choice to take you on as a risk, and that's what we're going to have to stick with. So by sort of constantly aligning ourselves to the consumer's best interest is basically the way to play this on-demand. I mean, you can see that playing out in all these other companies where you can routinely just kind of branch through the decision tree where Uber or any one of these companies essentially says, what would be the consumer-friendly consumer intelligent thing to do. Yep. And building that trust over time, especially important

given the background. Well, and you can tell, too, from some of the stats with the firm that customers are trying with smaller purchases, and then they often come back with larger and larger purchases, and you're building that trust over time. Yeah. One of the best stats we got is, so typically a lot of the purchases that we make, we underwrite, provide for, are what they call consider purchases. These are a couple of hundred dollars, but they're very lifestyle, life change driven. I learned this term from somebody in the furniture business, homeware business. Interesting stat, when people are furnishing a house, they make 85% of the purchases that they will pour from that brand within 45 days of the middle point of the largest purchase. So essentially,

there's an incredibly concentrated set of, and it kind of makes sense. Are you buying a well, you need some bedding and you need some towels and dishes because you're moving into your first apartment. And so what typically happens, people try us out and they borrow some amount of money at a merchant and they start paying it off and you're like, wow, it's all true. It is precomputed interest and they're transparent and I missed it by day and nothing happened. Somebody called me and reminded me politely and then I took care of it and they thanked me and sent me a nice note and that was that.

And so as they kind of figured, I was like, wait a second, I have a number. another thing I need to buy. And that other thing, and I'm going to go for the nicer one. So the second purchase is 88% larger than the first one on average. And it doesn't necessarily mean the same merchant. So people kind of go, where else can I use a firm? So that's been, the trust establishment exercise has been working fairly well, given how we, how we've been behaving. Yeah. All right. Let's dive under the hood a little bit. You're known for lots of things, but one of the most well-known is just fraud at PayPal and world-class fraud-fighting team,

which really enabled PayPal to grow into what it is today. And you've gotten some of the band back together at a firm. How, you hear lots of different companies saying, we're going to look at your Facebook friends, what you ate for lunch. I'm exaggerating. But there's all sorts of different social signals and different things that you can bring in. How are you thinking about judging what is and isn't important

and how do we know, like, is it going to work? So you don't. The honest answer is you don't. And the only way of building a successful anti-fraud and risk underwriting system is rigor. And for lack of better term, balls of steel. They sound a little preposterous, but it's actually one of the things that was an upriory at PayPal. So when we looked at our loss rates in the summer of 2000, we were basically bleeding out millions of dollars

in fraud-related losses per week. We were basically running out of money even though we had $60 million in a bank, which was very strange. But how much time do we have left? Six weeks. How much money do we have? 50-something million dollars?

That does not compute. But it does if you look at how much you were paying out to the various Eastern European mobsters. And so the thing that happened, though, is we had this unbelievable database of transactions gone bad. And you don't need to guess what will predict the outcome of transactions that go sour because you look at your historic database so long as you've done a good job logging, you can then run the correlation and say, oh, this thing predicts losses much better than that thing.

And you build a model around that knowledge. The most valuable data is not social data, not what you eat for lunch, not even debt-to-income ratio, even though that's fairly predictive, but your own data. Because every data set that you're looking at internally describes your own process, including your bugs, including your delays, including what change, including the merchant base that you sign and a merchant base that churn. All those changes to your system are encoded in your own logs. And building models from your own data is the only way to build a really successful system. Of course, it's very hard to build models from your own data if you don't have a lot of data. And the only way to get a lot of data is to lose a bunch of money.

At PayPal, we learn that by way of going, holy crap, we already lost a bunch of it. money. In fact, we've lost so much. We might be out of business any minute now. Quick everyone work faster. And we were able to escape the unfortunate demise and came out better for it. And this guy, Nathan and I built a bunch of really cool systems. And then he went on to do some other exciting stuff. And when I started a firm, I called them up and said, hey, I'm going to go do another one of these crazy things. This time, I'm going to be a little bit more careful about losing money. But I learned the hard way last time, you have to pay tuition. And it's expensive, but then you have this amazing data set that no one else has because it describes

your system perfectly. And he said, hey, if you're going to do it, let's get the band back together and he joined and now he runs at risk. But the punchline is you only find out what works when you use the data that describes your own system. And that means processing a lot of transactions and bracing for impacts because a lot of the transactions are going to go sour. One of the things that happens for a brand new launched credit card done right you lose about 50% of the dollar volume

in the first several months which is terrifying because it's half the money literally so you're quoted as saying that we're trying to build a company that will serve customers for their lifetime and now at a firm you can help me out when

I want to buy larger purchases you've moved into student loans I can imagine at some point I'm going to want a mortgage. And now, now I start to think of you as a bank. So are you a bank? Are you thinking you're going to become a bank? Or how do you imagine you want your customers to think about you in a few years? So I actually think banks in a few years will probably not exist the way they are today. The purpose that the bank, the banker used to fulfill a couple hundred years ago was that of a trusted advisor. A barely literate farmer would come to a rural

banker and say, hey, I got here a bag of gold that I have produced by the sweat of my brow and I know it's money. I need to do something with it to help me out. And a banker would be a trusted advisor who would say, hey, here's what we're going to do. We're going to put this to work in a following way or we're going to save this or be some sort of a structure that the farmer in the story would implicitly trust a banker to do. And at this point, we're actually trending towards the sort of an extremely mechanical relationship with your existing banks because they just don't have time for you because their efficiencies are so low and they're still maintaining these kind of empty standing branches where theoretically can go talk to a clerk

behind the counter at a Wells Fargo branch, but they probably wouldn't be able to answer any sort of sophisticated question about your financial life. So the goal of a firm ultimately is not so much to be a better Wells Fargo or to beat Citibank at their own game, to regain that trusted advisor relationship with the consumer where today we're helping them borrow responsibly so they know the incentives are aligned, they're not going to get screwed by late fees or hidden fees or any sort of a charge they didn't expect. In a long-term 20, 30, 50 years from now, in addition to providing you with all the products you mentioned, being a mortgage or a car loan, we want to ultimately be in a position to tell you

here's the smartest way to live your life financially and have the trust of the consumer to say, you know what, I will by default to basically do what you think is right, because you know more about this stuff. Lastly, on banks, you talk about how you think that they won't exist in the same form in years. Jamie Diamond, chairman of

J.P. Morgan Chase, is now quite famously quoted as saying, Silicon Valley is coming. And what he means by that is all the different startups that are nibbling at different pieces of their business. How do you see banks potentially working with startups or, and then

specifically a firm. Do you see yourself working with banks? One example, some of the regional banks are partnering with lenders who would actually underwrite clients that those banks wouldn't be able to underwrite. And you see a synergy there. Yeah. So I think there's no hate here. I'm very excited to partner. It was just about anybody so long as they're a good actor and acting in good faith. large banks have certain massive efficiencies that are very far away in our future and are not honestly core to our advantage and their partnerships are fantastic and extremely appropriate something like jp morgan for example has over two trillion dollars in their asset management and so they are an unbelievably well connected source of capital source of capital relationships

placement etc so there i imagine us working together more and more and with with companies like J.P. Morgan. The other thing that I think they and people that are looking for yield, their national buyers of the loan portfolios that we create. And so in that sense, we're kind of the opposite of the too big to fail problems where we create these very carefully crafted loans. We care to align ourselves with our customers. We make sure that we are reasonably well underwritten compared to sort of the, let's just pass. all these things together. And, you know, if you tranche it enough, nothing's going to happen until 2008.

So I think there's a lot of partnerships to be had on that front. Finally, I think the smarter ones of these banks kind of recognize that an impediment to their forays into the millennial demographic in particular is not lack of technology or lack of the right product, it's actually who they are. There's a fairly strong sense of, I don't want my bank to be blank, where blank is the top 10 or top 100

or whatever American banks. And the young people are basically looking for these services, the sort of a financial advisor thing that I described, perhaps, the most important piece of what they're trying to try to give themselves into. And that cannot come from what sort of Citibank represents to their parents, that that brand works fine for the parents that doesn't work for the kids. And so I think the opportunity for J.V. Morgan

and the like is to partner with the young companies like a firm to say, you know what, you will be the servicer of these new generations. And we need to work together and, participate in the yield, participate in the market, market services that you can't get to to these people. But ultimately, the relationship between us and our customers is something that is not really in competition with their opportunities. I don't believe the young people are actually listening when those guys are talking. And I don't mean that in the bad way. I just, I think that that's kind of the reality. All right. I want to end on a totally different note. You are rumored to have seen Akira Kurosawa

was 1954, seven samurai, something like 110 times. That is an accurate statement. Yes. So we have two questions. One, which samurai are you? Two, why do you use this as a, you show it to your management teams? And what is it about that you're trying to drive home? I think it's, at this point, it's almost a metaphor.

And so you can pick something and turn it into a metaphor for something else. and the mapping is extremely loose. I saw it in college for the first time in film class, and I'm a huge sort of a Japanophile, and I love the culture. I love Corosava films, so it was kind of just one of the things like I knew I was going to like it, and I watched it,

and right around the same time, I started running my very first student group. It was the student chapter of the special interest group for computer graphics. And the movie struck me as this very, entertaining tale of a team being built by, so I am obviously, Gamba, which is the, the guy who builds the team, and he basically says, well, I need to build a team of, you know, I think this starts out of saying, I need, I need 11 samurai, but there's really no time. So we'll settle for nine.

Like, well, okay, the minimum is seven. So they have six. and they have this guy who's obviously not a samurai. He's kind of a joker. But you know what? He shows as a samurai. So we're going to groom him into being a samurai. Then we're going to need an army, but we don't really have an army.

So we're going to go and train a bunch of peasants that don't really know how to fight. And they're probably going to run under pressure, but that doesn't matter. There'll be enough people there. So essentially it's this kind of a building a startup in a wartime for sort of a life and death situation. And when I saw this, I actually thought to myself, I need to use sort of the ideas presented. Because the movie is literally black and white, but everything in it is black and white. It's like this life and death situation. If they don't win, the bandits will kill them.

And if they don't win this battle, the bandits will, you know, kill this old lady and a baby. And so it's extremely black and white. It's sort of a true heroic saga. And so I watched it to sort of figure out how to run an organization, to sort of build a team around myself. And then as I got into startups, I realized, wait a second, I'd seen this before, you know, there's sort of a courage under fire. How do you discipline a team that is flailing?

Like there's a great scene in there where he kind of figures out that he's having fear drive his team apart. People are essentially starting to kind of stop caring about the common good and run to their houses and sort of defend their families, even though it's very clear that if the bandits are allowed into the village, then it doesn't matter if your house is your fortress, they're going to burn it down. And so he sort of basically says, look, you know what, next time somebody runs away, and it is ordered will be killed.

Like, I'm going to personally murder you if you step off the line. And so this kind of extreme level of management by sword where you have to, you have to be part of the team because you committed to it. So that was kind of a, at some point I basically decided, I'm just going to keep watching this movie because every time I watch it, there's one more wrinkle of something interesting or amazing that I picked up. And then I realized that I spent so much time doing computer graphics and starting companies in college that I completely missed this notion of needing to do what's called

a goal directed sequence at University of Illinois, which is, you can't really have a minor. So you have to take a bunch of classes that would have qualified you for a minor, but you don't get a minor on your certificate anyway. So last two years, while I was wrapping up all the crazy computer science stuff that I was doing, I also did East Asian literature and culture because I figured being a Japanophile and watching lots of Japanese animation and Corsova movies,

I could be able to breeze through most of the Japanese related content. It was exactly right. It was a right. It was a red gamble. And then the last, to get the sort of a certification of like, yes, you completely go-directed sequence, you need to write a paper. And the paper had some obscene requirements

like 25 pages, single-spaced. And it was like supposed to be done over the course of a year. It's like a senior project. type thing. And the cool thing about it was that you can pick any form of Asian art and write commentary on it. And it just needs to be sort of a dialectic where you have to be sort of very thoughtful about it essentially, for lack of a better term. And I said, well, obviously it's going to be sound samurai. Because by then I'd already seen it like 12 times or something

like that because I'd watch it with my friends and say, you know, here's what I think about this amazing movie. And then I realized there were two different translations and I had to watch the other one. and I thought the other one was better, so I had to watch it a couple more times, and I got a little bit obsessed. But that basically for this final paper, I said, I'm not really going to bother writing this 25-page paper. I don't have time for this.

I have to do some homework and computer science. But I'm just going to watch it every night, maybe twice a day, until I memorize every part of this movie so that one day I'm going to sit down and write a 25-page paper in one sort of fell swoop. And so I went up just watching it twice, three times a day. Sometimes I'd watch it kind of watch it fall asleep,

watch it some more. I didn't remember whether the VCR restarted or not. Then my friends started giving me copies. It became this sort of weird obsession. And then the last day before the paper was due, I sat down and started writing at 10 p.m. They turned at 8 a.m. and got 8 plus on the paper. So he worked for found. And then I think that was like in the 80s or 90s that I've seen it.

And I started counting after I realized it's been like 25 times. So I had a reason to go track. And then after I moved to Silicon Valley, I was lonely. So I'd watch it every once in a while. And then I started building a team at PayPal. And I started watching it as a practical aid for building a team. And then it became a tradition. I just keep on watching it.

Excellent. Hey, well, thank you very much for joining us, Max. Pleasure. Thank you.