April 17, 2024
Libor Michalek, President, Affirm
Rebooting Buy Now Pay Later Back To The Future
Listen on:
Most American consumers have credit card debt in some form, with the total across those consumers at an alarming $1.03T. A new subset of the debt market that has been growing over the years is the buy now pay later model, that is projected to grow to $167B market by 2032. Though it may seem familiar to those that remember retail layaway programs, the model offers another way for consumers and merchants to transact, without the common credit card interest rates charged across monthly statement balances.
One of the biggest of these rapidly growing platform companies is Affirm, Inc. Similar to Afterpay and Klarna, Affirm has over 50 million consumers on its platform that have generated $60 Billion in merchandise value through nearly 300,000 partners from the largest retailers and travel companies to the smallest online stores on the Internet.
We invited Libor Michalek, Affirms President and board member to this episode of The Reboot Chronicles to give us a behind the scenes look at this sector, with insights into what helped Affirm take-off, and what’s coming next.
Banks Vs Buy Now Pay Later
With the Buy Now Pay Later model growing and starting to infringe on the Bank’s credit card market, we asked Libor why banks never implemented this system before, or why the top banks probably won’t implement it in the future. To which Libor replied “the idea of banks entering into a product that’s going to cannibalize credit cards, but with lower margin, lower revenue for them, poses challenges.” Banks have no reason to cut into their biggest money maker. Plus affirm does things on a per purchase basis, adjusting rates and offering deals based on the customer. Something that would be difficult for banks to do now.
Massive Merchant Partnering
One of the amazing things about Affirm is their massive partner network that provide options to their consumers. With partners like Amazon, Shopify and Walmart Libor has learned several lessons about what makes a good partner. The tip he gave us was to make sure the partner you are looking for shares a similar work ethic as you do before making a deal with them. Ask questions like “what does your partner care about? How do they work? How do their teams operate” before signing off on a partnership.
Lessons For The NextGen
On what he would say to students soon to graduate, Libor said “make sure [what you’re doing is] fun and prepare yourself for doing a lot of it over the next five to ten years.” Another piece of advice he gave was to learn the things touching your fields of interests, so long as you are interested in it. It is the easiest way to learn new skills, keep yourself interested in your profession, and it could potentially open a door for the next big thing in your career.
