The following are excerpts from a Business of Fashion interview with Affirm CEO Max Levchin in March.
BoF: What are your plans for the fashion industry specifically?
Levchin: We’ve built a very cool, really differentiated solution that works for our partners that have both physical retail as well as online retail. One of the most interesting things that we are now figuring out is how to work with fashion customers who have a high velocity, with consumers who shop quite often, who make purchases, come back, reconsider, etc.—that’s where we can really play well with fashion merchants. We enter each of our partnerships trying to understand more together. We’ve created products specifically for the fashion merchant that seeks to truly understand their consumers and their purchasing habits.
How do you balance your mission with your commercial strategy?
We fundamentally ask one question, “Can this person safely afford the thing that they want?” And if the answer is yes, we will absolutely enable it. It’s not our job to judge what they’re buying, but it is absolutely our job to be highly prescriptive in whether they should or should not be buying or spending this amount of money.
Reading the public filing of most banks, you realize that for many of them, half the profits come from late fees. So, when we were thinking through how to tackle this, we said, part of our operating principle is that people come first. Practically, that means we should not make money when our customer makes a mistake or has such a misfortune in their life that they are unable to make a payment on time. We would much rather work with them. One of the ways that we can judge a company on that front is the net promoter score, which is based on their satisfaction score. Ours is 83, which is about 30 points higher than most banks that make credit cards.
What excites you most about Affirm’s future?
One of the most important reasons why I am so excited about the fashion vertical is because it’s the first vertical that I believe is really going to break personalization. I think it’s happening in retail in general, a little bit as a result of Amazon, but there’s a sense that everything is tailored to you in fashion and luxury. Affirm can really take that personalization to another, extremely interesting level, using our insights to understand the consumer in a way that empowers them, rather than capitalizes on them. There is huge potential to apply that to the fashion industry in innovative ways, and we are genuinely excited to do so.
Read the full Business of Fashion interview.