Business Breakdowns

Today we're breaking down Affirm, the buy now, pay later company founded by PayPal co-founder Max Levchin. Affirm processes more than $50 billion in annual purchase volume and is growing over 30%, even after its stock fell more than 90% following its IPO.

Joining me is Fraser, an investor who has spent time with Max and studied the business closely.

We explore how Affirm makes money, why its transaction-level underwriting is different from traditional credit cards, and how its merchant relationships create powerful network effects.

We also discuss the company's resilience through rising interest rates, its competition with Klarna, and why Affirm may be better understood as the American Express of the internet than as a traditional lender.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page⁠⁠⁠⁠⁠⁠⁠ here.⁠⁠⁠⁠⁠⁠⁠

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This episode is brought to you by⁠⁠⁠⁠ ⁠Portrait Analytics⁠⁠⁠⁠⁠ - your centralized resource for AI-powered idea generation, thesis monitoring, and personalized report building. Built by buy-side investors, for investment professionals. We work in the background, helping surface stock ideas and thesis signposts to help you monetize every insight. In short, we help you understand the story behind the stock chart, and get to "go, or no-go" 10x faster than before.

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Editing and post-production work for this episode was provided by The Podcast Consultant.

Timestamps

(00:00:00) Welcome to Business Breakdowns

(00:01:29) Max Levchin's journey from PayPal to Affirm

(00:07:11) How an Affirm transaction works

(00:11:53) AI and the advantage of transaction-level underwriting

(00:16:43) Affirm’s business model and unit economics

(00:20:18) Why Affirm is the internet’s American Express

(00:24:50) The power of negative CAC

(00:25:25) The growth opportunity in buy now, pay later

(00:28:16) How AI agents could transform payments

(00:31:51) Affirm versus Klarna and Afterpay

(00:37:14) Affirm Card and expanding beyond online checkout

(00:39:39) Why merchants adopt Affirm

(00:42:21) Customer retention and the Walmart relationship

(00:44:58) Affirm’s 90% stock decline and recovery

(00:49:15) Max Levchin’s leadership and AI-first culture

(00:54:06) How Affirm funds its loans and manages interest rate risk

(01:00:56) Affirm’s long-term growth opportunities

(01:08:57) The biggest risks to the investment thesis

(01:12:10) Lessons from Affirm’s resilience

Today, we are breaking down Applied Intuition. Our guests are co-founders Qasar Younis and Peter Ludwig, who started the company in 2017 with a mission to make a billion machines intelligent.

The simplest way to understand Applied Intuition is that it builds the brains for machines, and the tools other companies use to build those brains.

If a manufacturer wants its tractor, truck, or mining vehicle to drive itself, it can buy the intelligence from Applied Intuition or use its platform to develop its own. The analogy the founders use is Nvidia.

Just as Nvidia sells chips into everyone else's machines, Applied Intuition sells intelligence into everyone else's machines, across automotive, defense, mining, agriculture, and robotics, without building any single machine itself.

We discuss why the most important companies of the next 25 years will all be physical AI companies, Dana, their new agentic platform for developing and deploying these systems, and how the company raised a billion dollars without spending any of it.

Please enjoy this Breakdown of Applied Intuition.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page⁠⁠⁠⁠⁠⁠⁠ here.⁠⁠⁠⁠⁠⁠⁠

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This episode is brought to you by⁠⁠⁠⁠ ⁠Portrait Analytics⁠⁠⁠⁠⁠ - your centralized resource for AI-powered idea generation, thesis monitoring, and personalized report building. Built by buy-side investors, for investment professionals. We work in the background, helping surface stock ideas and thesis signposts to help you monetize every insight. In short, we help you understand the story behind the stock chart, and get to "go, or no-go" 10x faster than before.

Sign-up for a free trial today at ⁠⁠⁠⁠⁠portraitresearch.com⁠⁠⁠⁠⁠

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Editing and post-production work for this episode was provided by The Podcast Consultant.

Timestamps

(00:00:00) Welcome to Business Breakdowns

(00:02:16) Intro: Applied Intuition

(00:03:26) State of the Physical AI Market

(00:07:19) Why Physical AI Will Be Bigger Than Digital AI

(00:09:14) What Applied Intuition Builds & Sells

(00:12:36) Staying Flexible Across Technologies & Verticals

(00:13:16) Founding Story & Strategic Choices

(00:17:10) Evolution of the Business: Tools → OS → Autonomy Stack

(00:20:59) Introducing Dana: The Agentic Platform

(00:23:40) Building Dana: Customer Demand vs. Vision

(00:24:51) Why Applied Intuition Is Uniquely Positioned to Build Dana

(00:28:29) The Cross-Vertical Data Flywheel

(00:33:25) Rate Limiters to Physical AI Adoption

(00:35:41) Business Model & Revenue

(00:37:06) Customer Base & Global Reach

(00:39:22) Competitive Landscape

(00:44:21) Capital Allocation & Financial Strategy

(00:47:15) The Future of Physical AI

Today, we are breaking down Toast, a name we have covered before but are revisiting because the story has changed enough to be worth telling again. Most listeners will have tapped a Toast terminal without thinking much about the business behind it. 

Our guest is Sean Barrett, founder, managing partner, and chief investment officer of Counter Global, who holds Toast as one of his largest positions and walks us through how a restaurant point of sale company became the operating system that runs the restaurant.

He argues that Toast is best understood as the operating system for the restaurant rather than a payments terminal with software attached, and that the business grows as fast and as profitably as it does because the company spent years building purpose-built hardware, a multi-tenant software platform, and a sales force on the ground before it moved into new markets across grocery, enterprise, hospitality, and international. 

We also discuss why a business winning roughly half of new restaurant openings in the United States still trades at a multiple that looks closer to a mature company than a category killer.

Please enjoy this Breakdown of Toast.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page⁠⁠⁠⁠⁠⁠⁠ here.⁠⁠⁠⁠⁠⁠⁠

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Become a Colossus member to get our quarterly print magazine and private audio experience, including exclusive profiles and early access to select episodes. Subscribe at ⁠colossus.com/subscribe⁠.

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This episode is brought to you by⁠⁠⁠⁠ ⁠Portrait Analytics⁠⁠⁠⁠⁠ - your centralized resource for AI-powered idea generation, thesis monitoring, and personalized report building. Built by buy-side investors, for investment professionals. We work in the background, helping surface stock ideas and thesis signposts to help you monetize every insight. In short, we help you understand the story behind the stock chart, and get to "go, or no-go" 10x faster than before.

Sign-up for a free trial today at ⁠⁠⁠⁠⁠portraitresearch.com⁠⁠⁠⁠⁠

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Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

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Editing and post-production work for this episode was provided by The Podcast Consultant (⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://thepodcastconsultant.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠).

Timestamps

(00:00:00) Welcome to Business Breakdowns

(00:03:19) Toast Business Overview & Financials

(00:06:31) Recurring vs. Reoccurring Gross Profit

(00:07:39) Nuance on Revenue Semantics

(00:10:05) Transformation from 2020 to Today

(00:11:51) Full Product Offering Overview

(00:14:13) Revenue Model — Recurring vs. Transaction-Based

(00:16:08) Net Take Rate

(00:17:22) Software Side of Revenue

(00:18:49) Hardware & SaaSpocalypse Connection

(00:22:31) AI Offering & What They're Shipping

(00:27:01) Impact of 8% Revenue Uplift for Restaurants

(00:27:12) Competitive Landscape

(00:32:44) Switching & Churn Dynamics

(00:34:52) Competitive Advantage & Moat

(00:37:43) Management Team & Culture

(00:39:57) $10B Gross Profit TAM & Runway

(00:44:01) Valuation Approach

(00:45:53) Key Risks

(00:48:32) Key Lessons

Today, we are breaking down Auto1, and this is an interesting episode because we are tackling a business that most US listeners will not be familiar with, even though it resembles names they already know well.

Our guest is Harrison Moot, co-founder and CIO of Sandstone, who walks us through Europe's largest vertically integrated online marketplace for used cars. Auto1 is often shorthanded as the Carvana of Europe, and the comparison directionally fits, but the differences are what make the company worth understanding on its own terms.

The core of the conversation is how Harrison frames the company. He argues that Auto1 is best understood as a pan-European clearing house for used vehicles rather than a dealer with a website, and that the model only works because the company built its consumer sourcing engine and its wholesale dealer liquidity for nearly a decade before ever launching the consumer retail business.

Owning the sourcing, logistics, refurbishment, and financing stack across thirty fragmented national markets gives Auto1 a pricing and routing advantage that local dealers and asset-light classifieds cannot replicate.

Please enjoy this Breakdown of Auto1.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page⁠⁠⁠⁠⁠⁠⁠ here.⁠⁠⁠⁠⁠⁠⁠

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Become a Colossus member to get our quarterly print magazine and private audio experience, including exclusive profiles and early access to select episodes. Subscribe at ⁠colossus.com/subscribe⁠.

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This episode is brought to you by⁠⁠⁠⁠ ⁠Portrait Analytics⁠⁠⁠⁠⁠ - your centralized resource for AI-powered idea generation, thesis monitoring, and personalized report building. Built by buy-side investors, for investment professionals. We work in the background, helping surface stock ideas and thesis signposts to help you monetize every insight. In short, we help you understand the story behind the stock chart, and get to "go, or no-go" 10x faster than before.

Sign-up for a free trial today at ⁠⁠⁠⁠⁠portraitresearch.com⁠⁠⁠⁠⁠

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Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

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Editing and post-production work for this episode was provided by The Podcast Consultant (⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://thepodcastconsultant.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠).

Timestamps

(00:00:00) Welcome to Business Breakdowns

(00:03:35) Auto1 Business Overview 

(00:07:06) European Market & C2B Model 

(00:12:31) Founding Story & Sequencing 

(00:16:39) Why Cazoo Failed 

(00:16:42) Cazoo vs. Auto1 Approach 

(00:18:29) How a Transaction Works 

(00:22:11) Dealer Buying Patterns 

(00:25:49) Retail vs. Wholesale 

(00:26:18) Consumer Financing & ABS 

(00:27:57) ABS Lowers Funding Costs 

(00:28:16) Unit Economics by Segment 

(00:32:37) Network Effects & Data Moat 

(00:37:35) Path to Margin Expansion 

(00:42:23) Balance Sheet & Working Capital 

(00:44:40) Four Growth Levers 

(00:48:27) Dealers: Customers Not Competitors 

(00:53:17) Four Key Business Risks 

(00:54:12) Inventory Risk & Mitigants 

(00:58:32) Valuation Framework & Multiples 

(01:03:14) Vertical Integration & Capital Cycles

Today, we are breaking down Opendoor, and this is a unique episode. We recorded with Kaz Nejatian, the CEO of Opendoor, shortly after the company reported its first quarter 2026 earnings, and we covered both what is happening inside the business right now and how he is thinking about Opendoor from the seat after coming over from Shopify. 

The core of the conversation is how Kaz frames the company. He argues that Opendoor is a market maker rather than a prop desk or an asset manager, and that the model only works when you optimize for velocity instead of spread. Buying lots of homes and selling them quickly gives Opendoor a live information advantage over the rest of the housing market that no other participant has, and that advantage compounds as the customer base broadens beyond people who simply need to move fast.

Please enjoy this Breakdown of Opendoor.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page⁠⁠⁠⁠⁠⁠⁠ here.⁠⁠⁠⁠⁠⁠⁠

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Become a Colossus member to get our quarterly print magazine and private audio experience, including exclusive profiles and early access to select episodes. Subscribe at ⁠colossus.com/subscribe⁠.

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This episode is brought to you by⁠⁠⁠⁠ ⁠Portrait Analytics⁠⁠⁠⁠⁠ - your centralized resource for AI-powered idea generation, thesis monitoring, and personalized report building. Built by buy-side investors, for investment professionals. We work in the background, helping surface stock ideas and thesis signposts to help you monetize every insight. In short, we help you understand the story behind the stock chart, and get to "go, or no-go" 10x faster than before.

Sign-up for a free trial today at ⁠⁠⁠⁠⁠portraitresearch.com⁠⁠⁠⁠⁠

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Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

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Editing and post-production work for this episode was provided by The Podcast Consultant (⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://thepodcastconsultant.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠).

Timestamps

(00:00:00) Welcome to Business Breakdowns

(00:02:24) Thesis Since Joining OPEN

(00:04:49) OPEN is a Market Maker, not a Prop Desk

(00:04:53) Opendoor's Advantages

(00:07:37) Spread vs. Velocity

(00:11:25) Customer Base

(00:13:16) Attachment Profit Pool

(00:15:45) Order of Product Rollouts

(00:18:47) Friction from Attachments?

(00:19:03) Lessons from Shopify: Solving for Friction

(00:21:45) Investing vs. Profitability Balance

(00:23:58) AI Inside Opendoor