RWW Paypal C2014-01-21

here tonight we have @davidmarcus President of Paypa [Using the futureofmoney hashtag as rww didn't define one]

Zong got acquired by Paypal in summer 2011 - we built a small merchant swipe system for Paypal.

the common scenario is "big company buys small company, then the entrepreneur leaves. What's differnt for you?"

The difference is that scaling a payments company is hard. It's not like consumer internet.
we need to be legally compliant in hundreds of countries, we need to scale, we need fraud detection
I saw a lot of upside opportunity in the Paypal I took over and you can see it growing now

Owen Thomas:

I see a wasteland of online payment startups that none of us remember. What %age is on ebay.com?

David Marcus:

ebay is about 30% of paypal. For pure pay startups to succeed, you need a parasite/host relationship
if you think about people on ebay mailing checks to each other across the country, that seems crazy now

Owen Thomas:

we see that replicated - Google is most successful in payments in the Google Play Store

David Marcus:

it's significantly harder to do payments in an environment that you don't control: to do refunds at 140M payers
the compliance burden is not going to get any lighter at any point in the future. Banks have 5000 people on it

Owen Thomas:

there's Square that a lot of people talk about, braintree that was less talked about but you bought them

David Marcus:

Square exists because we fell asleep at the wheel for a few years. They exist because we sucked for a while
Now we're committed to being best in class for developers - thats why we bought Braintree.
Braintree jumped on the mobile bandwagon very early on. We want to lead on mobile
there are more startups that can be built now that everyone has broadband mobile devices with them
I needed to know I'd have enough leeway at paypal to drive the change I wanted to. I got that.
We had 9 different product groups; we were an IT shop with no craftmanship. We now have 1 agile product group
we now have small groups of engineers, product people and designers working on projects. No more waterfall
our old process meant that PM's never got to iterate, as engineers were reassigned after launch
The reason startups can disrupt large companies is because they can iterate faster. We need to iterate at scale
our existing checkout experience that most people see is still pretty outdated.

Owen Thomas:

I always feel that Paypal is trying to trick me @davidmarcus: that's over.

David Marcus:

In the past we used to annoy our best customers by making them connect their bank accounts
you cannot win for along period of time by making your customers do things against their will. We stopped
if you don't want to add your bank account, you don't have to. It costs more, but you can choose.
We will offer a line of credit, but we won't force it on consumers like we did
2 months ago we started doing small biz lending. Small biz are great people. It's really hard to run a store
one thing small biz needs is working capital. It's very hard for them to get loans from traditional banks
we know the small biz, we see their transactions, we know that they can afford to borrow
We had a wedding dress company - they had a small biz loan, and their brides could borrow to buy dresses

Owen Thomas:

How do you define mobile payments? taking an Uber? it could be swiping a card on a phone

David Marcus:

eventually mobile will be everything, and at that point it will become really easily
eventually you'll authenticate high value transactions on your mobile even if you're using your computer
now we have 2 categories of payments: buying things online using mobile; in-store mobile trnasactions.
last year I said that within 5 years you wouldn't have to carry your wallet in a dense urban area. 4 years now
We have earnings tomorrow, so I can't share numbers, but 2013 was spectacular on mobile
we made some great acquisitions last year. It's like inoculating a large company with a virus to make it safer
If Target had taken paypal, those customers would not have had data compromised
we have 140 million customers who trust us with their financial data. Biometrics need even more trust
Target being hacked will lead to Chip and Pin in the US faster. a worse consumer experience, but more secure
we're working with VISA and MC to pass hashes instead of in the clear numbers so customers protected

Owen Thomas:

What happened with Uber today? How do you respond on twitter like that

David Marcus:

it doesn't take that much time to respond on twitter - you can do it 15-20 mins a day, when team can resolve
any corporate CEO who says they don't have time for twitter customers is bullshitting - control your own time
we need to be fanatical about making our customers love us. Money is emotional, we need the right emotion
I don't know what happened with Uber today, but we will protect our customers 100% of the time. We'll fix it.
Bitcoin is a ledger - it's a store of value. That can be interesting if you're somewhere like venezuala
Bitcoin may become a currency in future, but it's not there due to volatility
all the payment processors now don't settle in Bitcoin, they do it in fiat currency - it
Paypal is like TCP/IP I encourage you to read @pmarca's NYT piece today: http://dealbook.nytimes.com/2014/01/21/why-bitcoin-matters/
governments have very different attitudes to bitcoin. China banned it, Norway taxes capital gains.
Bitcoin will shake out legally this year. We're paying attention.
There's no buyer protection with Bitcoin. Paypal offers that

we sell electricity in developing markets. How do you move money without broadband?

David Marcus:

we've done this in Brazil, data plans are 10%, smartphones 30% on wifi. We built a flow on *21# - 2M customers
the hard part of being a global company is adapting to these local conditions

Owen Thomas:

How do you compete with SF based startups for talent?

David Marcus:

We have a lot of people who commute, which is a pain in the neck, because the opportunity is there
we need ot find a way for people in the city to work too. Nothing to announce today
Cash was money 1.0 - plastic is money 2.0; consumer credit and all these great things this country was built on
Mobile is Money 3.0. I think all of this will be mobile in time, but cash is very hard to get rid of.
I went door to door with small businesses - they say they still want their old cash register.
Businesses don't want to declare every transaction for tax, or pay fees for each small one.
our relationship with banks is the best its been in years - we are very complementary
our lending is single digit billions of dollars, whereas banks have 100s of billions of lending
we have data the banks don't have. That means we can make underwriting decisions that they can't
[asked about insureance] Focus is important. There is a curse in large biz of doing too much

Owen Thomas:

Paypal used to sell mutual funds - they sued to overreach

David Marcus:

We've killed so many things. You have no idea. We're going to deprecate a lot of products this year
[asked about M-PESA] we have partnerships with carriers when we can, but they need to make it easier