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A Conversation with PayPal Cofounder Max Levchin

July 11, 2013

By his own admission, Max Levchin was not meant to work for large companies or other people. Whether or not he was born an entrepreneur, he certainly became one early in life. He founded his first company while attending the University of Illinois at Urbana-Champaign, the alma mater of Marc Andreessen and the birthplace of the history-warping Mosaic web browser. In 1998, shortly after graduation, he cofounded Confinity, the company that became PayPal, and served as its CTO for four years.

After leaving PayPal, Levchin founded Slide, a company that created social-networking and photo-sharing tools and applications, in 2004. Google bought the company in 2010, closing most of its operations the following year. Levchin did not stick around. “I am not really big-company material,” he says.

In 2012, Levchin founded tech incubator Hard, Valuable, Fun (HVF) to work on problems for which data can provide a solution. At the “D: All Things Digital” conference in late May 2013, he introduced Glow, a mobile application to help women who are having difficulty conceiving a baby. A woman enters data into the app concerning her menstrual period, body temperature, and presence of cervical mucus, and the app then suggests the best time of the month for conception.

At the conference, Levchin spoke with Antonella Mei-Pochtler, a BCG senior partner and managing director. During the conversation, Levchin explained that his entrepreneurial zeal springs from his immigrant roots: he and his family moved to Chicago from the Ukraine when he was in high school. The discussion continued, ranging from passion and entrepreneurship to which activities are best completed by humans and which are better suited for computers. Excerpts follow.

About Max Levchin

At a Glance

Born in Kiev, Ukraine

Year Born: 1975


1997, bachelor of science degree in computer science, University of Illinois at Urbana-Champaign

Career Highlights

2012–present, president and chief executive officer, HVF

2010–2011, vice president of engineering, Google

2005–2010, founder and chief executive officer, Slide

1998–2002, cofounder, chief technology officer, and director of PayPal, originally founded as Confinity

Outside Activities

Chairman of the board of directors, Yelp and Kaggle

Member of the board of directors, Yahoo! and Evernote

You have been involved in the creation of PayPal, Slide, and now HVF. What are the big problems you really want to tackle?

After we sold Slide, I spent a year helping to integrate it and trying to be helpful at Google. But the experience confirmed that I am not really big-company material. Although Google is the best big company in Silicon Valley, I probably need a sticker that says “does not play well with others.”

After leaving Google, I was talking to my wife about what to do next. She said, essentially, “You spent the last five to six years putting a lot of sweat and blood into media and entertainment work, but it’s not really what you love. You don’t watch TV. You don’t go to the movies. You don’t like media. You should go figure out what you love and go do that. You are at a point in your life where all your engines are as lubricated and as revved up as they are going to be. You are probably as good as you’re going to be at the one thing that you’re good at ever. So go do that.”

So I spent a few weeks roaming around thinking about it, and I eventually wrote an essay about what am I good at and why and what I should do with life. It gave me the idea to form Hard, Valuable, Fun. I want to work on things that are hard, valuable, and fun.

I love working with huge amounts of information. When I feel like I’m swimming in data, I am happy. So I basically went to work on making sense of data and helping the world learn from information.

I spent about half a year trying to think about it that way. But I was not making much progress, so I changed my framing. I started to think about problems where data become the path to the solution. As soon as I did that, everything just clicked in place. There’s no shortage of big problems that can be solved with data. We are looking at food, health, education, energy, and finance.

In each of these areas, there is an enormous set of mega-problems. How do you go about picking and choosing the one you want to concentrate on? Is it based on passion, analytics, or what might produce the biggest public value?

I like the approach of thinking about where we can see the most leverage. We can’t start by saying we’re going to solve health care. It’s too big. We have to find a segment. And the reason we started with infertility is because it’s very visceral—the survival of the species.

Infertility is an increasing problem, and the reason it’s increasing is actually positive. Women are choosing to delay childbirth because they are becoming more productive in society. They are supplying human capital. That is good but does not change the fact that after age 39 it’s really hard to conceive.

So I started to look for areas of high leverage and where the state of affairs is bad. Today in the U.S., health insurance doesn’t really cover in-vitro fertilization (IVF), which is the most effective treatment. Even though Glow only helps a little bit, it’s still infinitely better than zero coverage for IVF.

The long-term goal is to create an evidence-based health care environment. In the short term you always have to look at the box that you can fill.

How did you transfer some of the insights from helping to start PayPal to this activity, which is a form of social entrepreneurship?

There is one important lesson from PayPal that I think is very relevant. Humans are really good at pattern recognition, and computers are really good at data processing. For any problem you want to solve with data, you need to determine which piece is pattern recognition and which piece is data processing. Find the best humans to do the former and the best programmers to do the latter. It’s very tempting to say that something is a data-processing problem so let’s just get computers to do it. It’s also very tempting to say we don’t have enough data so we just need to eyeball it. You really have to separate the two activities.

What do we need to do to allow people like you—entrepreneurs—to thrive?

Actually I think you don’t need to do anything. A defining part of entrepreneurship is struggle. (It’s very eastern European for me to say that.) If you put people that you expect to do disruptive things into a gentle environment, they might get too comfortable. It’s actually important to go through hard times. One quarter of successful companies were started by immigrants.

If you go through the immigration process early in your life, like I have, you grow up quickly and you take responsibility for yourself and move with the opportunities, as opposed to waiting for things to land in your lap or be handed to you. You don’t need to nurture entrepreneurs. They will always find their own way.

What is the next great idea you have? Do you have a reservoir of ideas?

I have a very long list. I am really excited about food sourcing. As analog data are becoming available in digital form, we can mine them for interesting outcomes. If you look at food production, it’s super analog, the process of sourcing food and managing logistics—more specifically, soil yield, utility, seed production. Companies have some ideas on how to do it, but many small farmers have absolutely no idea.

Thank you very much for great insights and for making the world a better place.

A Conversation with PayPal Cofounder Max Levchin