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Afterpaya retail installment payments innovator and one of the fastest-growing global fintech companies, was just sold to Square for $29 billion, making its co-founder, Nick Molnar, Australia’s youngest self-made billionaire.
As a young, serial entrepreneur, Molnar’s vision for Afterpay was to create a global payment solution that gave young consumers a more flexible and transparent way of paying. As a millennial himself, he recognized that his generation has an aversion to credit cards learning from the issues that ensued from the 2008 financial crisis. He launched Afterpay with Anthony Eisen in October 2014 and listed the company on the Australian Securities Exchange in 2016. The company expanded into the US in May 2018 and soon after, expanded into the UK, Canada, France, Italy and Spain.
When I asked Molnar if he contemplated being an entrepreneur even at a young age, he says it was ingrained in him from the beginning.
“[My parents] were always entrepreneurs themselves. They taught me that you didn’t have to rely on a paycheck and you could forge your own path. From a young age, I was surrounded by the difficulties of being an entrepreneur but also all the benefits that came with it. [My parents] instilled a huge amount of confidence and self-trust in me.”
Prior to establishing Afterpay, Molnar launched American online jeweler, Ice.com, in Australia and successfully grew the business to become the largest online-only jewelry and watch retailer in Australia. Earlier in his career, he worked as an Investment Analyst at capital fund MH Carnegie & Co., where he was primarily responsible for growth-stage investments.
When I asked Molnar how Afterpay came about, he explains, “I was selling jewelry online. So I had retail in my blood. Growing up during the 2008 financial crisis — I turned 18 in 2008 — I saw that people just stopped spending money on credit cards, and I watched this trend over a few years to see if it was, in fact, a fad or was going to sustain. And basically, [the trend] just kept growing as millennials made more money. They spent more on debit [cards] because that was their preference, and that just kept becoming more and more prominent.”
Molnar attributes much of the brand’s success to his co-founder and co-CEO, Anthony Eisen, his former next-door neighbor.
When I asked how they met he says, “[Anthony] approached my dad one day when he was taking the rubbish out. And he said, ‘I don’t mean to pry, but I see the light on upstairs at your house every night and then the next day your son and wife take many boxes to the post office. What are you doing?’ That was how I met my co-founder of Afterpay.”
A discussion about a new business quickly developed, with Eisen immediately impressed with Molnar’s instinctive entrepreneurial ideas surrounding the shift in millennials’ spending habits. “I understood that the model of a credit card whereby if 100% of people pay back on time, the industry doesn’t work. Incentives are flawed,” says Molnar. “[So] I reimagined a new system by starting afresh with no legacy business model that you’re trying to preserve and build a different brand, business model and economic outcome where everyone in the equation wins.”
Common for most entrepreneurs, Molnar faced hiccups in the first year. Afterpay’s very first retailer took it off their platform after launching because they didn’t think it was working. But within a couple of short years, it all changed. Molnar says that when the Kardashians filled out the contact form, he knew things had shifted forever.
“When you really believe that you’re approaching an industry in a new way, sometimes that takes time to unfold. And that’s one of the tipping points. After those milestones occur, how do you capitalize on accelerating your growth beyond that milestone,” he says. “It’s a complete mindset game when you’re an entrepreneur, [getting] to the next phase.”
Molnar further explains the business model in simplistic terms, saying, “Just take a very simple example: a $100 if I’m buying a $100 pair of shoes. Instead of spending $100, the consumer pays four payments of $25 every two weeks. [Afterpay pays] The retailer the next day, and then we assume all of the non-payment risks so the consumer gets the product up front and then we recover the money on the due dates in the future. The consumer gives us a debit or credit card to make their automatic repayments on these due dates.”
I was curious to know what Molnar would do now if he was 23 or 24 years old, starting out in the world we live in currently. He captured a trend so early on. Where would he be looking now in terms of starting a business? He was reticent in naming a particular area or industry, but said his biggest regret was not scaling earlier.
“My one regret is that I didn’t kind of see the opportunity to scale quicker,” he says. “You hear a lot, particularly with this next generation, a side hustle. But many of these side hustles can be really great businesses that can create an income well beyond getting a job and sometimes it’s about taking that risk. When you build a side hustle, you can always turn that into a business.”
Afterpay is almost in its infancy of what it could achieve globally. Clearly Molnar has a lot to be proud of, but I asked him to single out what he’s most proud of.
“I’m probably the most proud that an Australian born company can prove to the world the capability of Australia.” Traditionally, Australian businesses didn’t go global. I’m sitting here in LA and my life has demonstrably changed to where it was three or five years ago, but I am very proud of Australia’s ability to prove itself to the world.”