This is Jesse Pujji and today’s episode is a follow up of last weeks’ Block episode, covering Afterpay the buy-now-pay-later giant. Founded in Sydney Australia in 2015, Afterpay was a rapid success in the buy-now-pay-later market before being acquired by Block for $29bn in 2021.    To breakdown Afterpay, I am joined by investor Joe Magyer. We cover how buy-now-pay-later compares to traditional credit cards, what differentiates Afterpay from direct peers, and how each player of its ecosystem benefits from its offering. Please enjoy this business breakdown of Afterpay.   For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.   -----   This episode is brought to you by Tegus. Tegus is the new digital hub for market intelligence. The Tegus platform empowers Investors and Corporate Development teams to invest smarter by pairing best-in-class technology with the highest quality user-generated content and data. Find out why a majority of the top firms are using Tegus on a daily basis. If you're ready to go deeper on any company and you appreciate the value of primary research, head to tegus.co/breakdowns for a free trial.   -----   This episode is brought to you by Daloopa. Daloopa streamlines a major pain point for investors. By capturing all of a company's KPIs and adjusted financials into their database, Daloopa makes it easy to quickly update your models for what matters. Daloopa uses AI to find every KPI disclosed - from charts, to text, and even from footnotes of investor presentations. Daloopa updates these KPIs and data points in your existing Excel models in one click, regardless of your source or format. Test Daloopa for free at daloopa.com/Patrick.   -----   Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.   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.   Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss   Show Notes [00:02:52] - [First question] - What is Afterpay and what it does [00:07:07] - Size and scope of Afterpay today [00:08:27] - The founding story and their growth being such a young company [00:12:11] - History of the buy now pay later industry [00:13:34] - How their payment models tend to work and how these companies make money [00:16:35] - Unit economics, transaction structure and how money is made [00:21:44] - How Afterpay drives leads to people via their app and merchant aggregation [00:23:39] - An early focus on fashion and expanding beyond their core clientele [00:27:13] - Cost of sales and thoughts on taking more credit risk [00:31:54] - Losses as a part of cost of sales and interest [00:33:48] - Unique things that Afterpay can do given their business model that others can’t [00:35:21] - Growth levers for this business  [00:38:29] - Other major things they’re spending money on and their acquisition by Block [00:44:28] - The competitive landscape in the BNPL industry [00:47:54] - Afterpay’s flywheel and how they’ve built it better than others [00:49:34] - Whether or not regulation plays a role in this space [00:52:21] - What will have gone right in the next five years to ensure Afterpay’s growth curve [00:55:01] - What will have happened if Afterpay’s growth doesn’t work out in the future [00:56:31] - Whether or not interest rate risk could turn south for them [00:57:30] - Lessons for investors, builders, and where to learn more about Afterpay’s story; Buy Now, Pay Later