Max Levchin

It's a late fee.

On the other side, there's a bank that gave you the credit card that says, hooray.

that's 100% gross margin product, a late fee from you just goes right to the bottom line.

So on one hand, it's important to underwrite just good enough.

So you don't like default or run away with the money, you know, don't defraud us.

But if you're not planning to pay us back fully or not in any particular predictable timeline, you'll just pay us more money.

And so the incentives in the industry are messed up where you're literally allowing

people to underwrite you less than perfectly because then they'll make more money.

On the other hand, we have no reason to underwrite less than the best we possibly can because if you don't pay us on time, we just make less money.

If you don't pay us at all, we just make less money.

And so the incentives are fundamentally aligned.

The alignment between a firm and its borrower is kind of the cornerstone of why we do what we do and things that we get very good at is exactly because we must.

Like if you are not paying us on time, bad things happen to us.

I'm not for a couple of reasons.

So one,

We've had a couple of mini recessions, as you put it.

That's exactly right.

So we've had a few moments here and there where things seem dire.

So we've been operating for 15 years.

We saw the extreme uncertainty of COVID.