Veering from the Silicon Valley mind-set, PayPal CEO Dan Schulman came from outside the digital payments firm and breathed new life into it.
PayPal was a bit different from other Silicon Valley tech firms even before Dan Schulman came along. It is not run by any of its founders, and has not been since its acquisition by eBay in 2002. PayPal was spun off from eBay and re-listed as a separate entity in 2015. It was around this time that Dan Schulman took the reins. A former Virgin Mobile and American Express executive, he brought with him a more low-key, contemplative leadership style.
For years PayPal had followed an adversarial strategy, clashing with rivals such as credit card firms as a brash fintech disruptor. “Everyone hated them. They had a culture of disruption and fought with everyone”, said Lisa Ellis of research firm MoffettNathanson. If Schulman had not changed it, “PayPal could have been dead by now.” He took the company in the opposite direction, forming some 40 partnerships with would-be rivals such as Visa, MasterCard and Google Pay, which extended its reach.
Martial arts devotee Schulman said, “I’m a big believer because of martial arts that the best way to win a fight is to avoid a fight”. The change has quelled investors’ fears that PayPal could be destabilised by bitter rivalries. Now the fintech pioneer is one of Silicon Valley’s most valuable technology firms, with a market cap of $101 billion. This year it is expected to handle about $582 billion in digital payments and bring in over $3 billion in operating income.
Schulman’s status as a non-founder who turned his company around makes him what Dan Rosensweig calls a “re-founder”. Rosensweig is the non-founder and longtime CEO of education technology firm Chegg. Other examples include Satya Nadella of Microsoft as well as Shantanu Narayen of Adobe and Chuck Robbins of Cisco. “As outsiders they have been able to embrace new strategies without being beholden to what founders had envisioned”, The Economist explains.
Another common Silicon Valley tenet is that only one company can win in a given area, as demonstrated by Google’s domination of search and Facebook’s supremacy in social media. Like these firms, PayPal has “network effects”; that is, it becomes more useful as more people join in. But, as befits Schulman’s leadership style, it differs in that it benefits from the success of other digital payment processors, because their success helps expand adoption. “The real war is the war on cash,” said Schulman. Switching consumers from cash to digital is where the opportunity lies.
One formidable rival remains, however, and that is Amazon. The ecommerce titan does not accept PayPal, and has its own competing service, Amazon Pay. It is much smaller than PayPal, but growing. In this rivalry, PayPal could again benefit from its good will amongst retailers and other players in the tech sector. They will likely be disinclined to offer Amazon’s payment service on their websites, which would help its expansion, since they see it as a threat, not an ally.
