Nick Molnar reckons his high school report card was never very impressive. No teachers waxed lyrical about his potential or earmarked him for future success. "It wasn't like I was obviously entrepreneurial or anything," he says. But outside the classroom at Sydney's Moriah College, it was a different story. "We went on a family holiday to Japan, and I ended up importing headphones; I sold sushi rolls at school because everyone liked them, but the canteen didn't stock them," he recalls. "I always watched closely."
As far as Millennial power moves go, selling sushi rolls to your friends is up there – Molnar spotted a gap in the market and promptly filled it with Japanese food. It wouldn't be the last time he listened to his contemporaries and acted accordingly. In the late noughties, Molnar realised that his peers had developed a serious aversion to credit cards. "During the 2008 global financial crisis millennials preferred to spend their own money, we were picking debit cards over credit cards," he says. "But we still wanted to buy stuff."
And so, much like bringing sushi to the playground, Molnar found a way to solve a problem: Afterpay. By now you've almost certainly heard of the "buy-now and pay-later" service where whatever you want is yours today if you pay a fourth of the price upfront and fix up the balance in three equal instalments every two weeks. Afterpay is what happens when Molnar watches closely.
While the idea might sound like a eureka moment, Molnar benefited from a combination of luck, lineage and location. His family is in the jewellery business, meaning he was familiar with buying, selling and the world of eCommerce. "After I finished school in 2007, my mum pushed me to start selling jewellery on eBay. Within two years, I was selling the most jewellery on eBay in Australia out of my bedroom."
Meanwhile, opposite that bedroom was the house of (eventual Afterpay co-founder), Anthony Eisen. Eisen was Chief Investment Officer at investment company Guinness Peat Group and had spied Molnar's light on late at night. "Anthony was writing a big public investment at the time, and I explained the concept of Afterpay and convinced him it would work," he recalls.
Our name (has) become a verb. You can't just turn any name into a verb.
With Molnar's generational insight and Eisen's financial clout, Afterpay went from concept to creation, by 2016 it had listed on the Australian Stock Exchange. "When we listed, we had 100 retailers and about 40,000 consumers; today, we have 35,000 retailers and five million consumers."
A lot certainly has changed, and for one thing, Molnar is no longer working out of his bedroom. Instead, we're talking via video call, which feels industry-appropriate. The 29-year-old is holed up in the conference room of his San Francisco headquarters; Afterpay happily at home amongst its Silicon Valley siblings. There are also offices in Melbourne and Sydney housing staff of more than 400. While the figures indicate the success of the company in black and white – A$5.2 billion in total sales – an even more telling sign of Afterpay's influence is the name becoming a verb. Much like "Googleing" something, saying "just Afterpay it" requires no explanation. "Our name is one of our biggest competitive advantages," Molnar echoes. "You can't just turn any name into a verb."
The credit goes to his aunt, who came up with the name during a brainstorming session. "We had like things like B-pay, D-pay, A-pay, Pay Later, there were a bunch of options," he recalls. "Then my aunty said "what about Afterpay?" and we knew."
Last June, the company arrived in the US, a big-money move that sent share prices skyrocketing. The brand teamed up with retail giant Urban Outfitters for the launch, and it didn't take long for American consumers to swarm. "In a little over 12 months, we have six and a half thousand retail partners."
They also tapped into the influencer market, partnering with Kim Karadhaisn to help sell her KKW beauty range. Who better to convince a generation to spend more and worry less than the poster girl for global glamour? "The Kardashians have an incredible influencer-lead business, and they're ultimately changing retail, but the important thing is they contacted us."
Listening to Molnar gush about Afterpay's victories, there is no doubt he believes in his company. On the day we speak he's wearing an Afterpay T-shirt. Scroll through Afterpay's Instagram page, and Nick Molnar's account has liked nearly every post. He may be the founder, but he's also its biggest fan. "No one says that they love how they pay for something, but our customers do say they love Afterpay, and I can see why," he says.
This same loyalty is evident when talk turns to Afterpay's trials and tribulations. The single biggest criticism is that it normalises debt, with users becoming accustomed to buying things they can't really afford. Then there's the credit debate. Afterpay claims it differs from credit card providers in that users can't fall into a debt trap and all purchases are interest-free. "We don't make our money from you; our money comes from retailers and service providers who pay us to help you buy now, and plan your repayments," reads the company website. "That's why we don't charge interest."
That's not strictly true, of course, Afterpay does make money from customers who incur late fees. Missing a payment equals a $10 late fee, and if you fail to make a payment within seven days, you'll be charged a further $7. The company caps fees at 25 per cent of the original order or a maximum of $68, whichever is lower. But this still adds up, especially when you take into account Afterpay's massive expansion. In its 2018 end-of-financial-year report, income made from late fees surged 365 per cent to $28.4 million. "We still make less than 20 per cent of our income from the consumer but a traditional credit product would make the opposite of that," Molnar counters. "More than 95 per cent of all the customers pay back on time, and when someone goes late, they can't keep shopping."
The eye-watering expansion of Afterpay and other providers like Zip, Openpay and Humm, has caught the attention of the corporate regulator, Australian Securities and Investments Commission. With increased revenue comes further scrutiny and calls for Afterpay to be regulated in the same way as other credit lenders. "We're not saying they shouldn't exist, we just want them to play by the same rules as other creditors," explains Gerard Brody, head of the Consumer Action Law Centre. "They're unregulated, so the consumer protections don't apply, they're not required to lend responsibly, and they don't look at whether or not you can afford the repayments."
During the conversation about Afterpay's perceived problems, Molnar never seeks to duck or deflect. "We want to do the right thing by the customer," he maintains, and it doesn't feel like spin. Sure, his customers may have secured him a spot at number 9 on the AFR Young Rich list with a personal wealth of $564 million, but his investment in the company obviously extends beyond the bottom line.
So what is the right thing exactly? "If [Afterpay] supported a change to credit law, so they were regulated the same way, that would show to everyone that they want to ensure their customers are protected," says Brody. In the increasingly murky buy-now pay-later sector one thing is clear, the noise isn't going away. Neither are the obstacles. Success attracts competition, and Afterpay's resounding global footprint has woken the sleeping giants. In July, VISA announced plans to release their own similar service, causing Afterpay shares to slump. Mastercard quickly followed suit. For his part, Molnar seems content to welcome anyone that comes knocking. "Competition is a great thing, a year ago we were talking about whether or not there was an opportunity for Afterpay and now we are discussing whether we can compete with the best companies in the world."
Earlier this year he stepped down from his role as CEO, taking up a position as global chief revenue officer. This comes off the back of first-time fatherhood; Molnar and wife, Gabrielle, welcomed their daughter, Ella, last December. "I'm more conscious of my time now," he says. "Every night, I try and be home for dinner, I'll still work after that, but I try to block out those moments, so we have time together as a family."
Having built Afterpay from the ground up, it's not surprising that the Australian entrepreneur is guilty of battling with work-life balance. "My wife keeps me in check; if I'm pushing it too hard, she'll let me know," he says. It must be a tough job because it's never long before Molnar drifts back to talking shop. "The end goal is, and always has been, to be the world's most-loved way to pay."