By MIKE ISAAC OCT. 1, 2014
Dan Schulman is not a suit-and-tie type of guy.
He
did not attend classes at an Ivy League school, but he used to drive a
delivery truck for Princeton University’s campus bookstore. He did not
go into academia, like his parents; he preferred varsity sports.
Forgoing wingtips and slacks, he is more likely to show up to a
boardroom meeting wearing flip-flops and jeans in the summer, or a pair
of cowboy boots in the winter.
Mr. Schulman may need to buy a few new suits.
EBay,
the online commerce site, announced on Tuesday that it would spin off
PayPal, its online payments business, an apparent effort to keep up with
the fast-changing pace of the global e-commerce industry. To run
PayPal, the company brought in Mr. Schulman.
EBay
announced several other executive changes as well: John J. Donahoe,
eBay’s chief executive, will no longer have a day-to-day role at the
company after the split, expected next year. Devin Wenig, the current
head of eBay’s marketplace unit, will run eBay after that.
But
Mr. Schulman, 56, is the biggest unknown in the mix, and his job comes
with its share of challenges. He must find ways to attract new
engineering talent to PayPal, which is viewed by many in Silicon Valley
as technologically stagnant. He faces threats from new and powerful entrants in mobile payment, including Apple.
And
perhaps most of all, he must lead the company into a new era of using
technology to make purchases, ushered in by the advent of the
smartphone.
EBay
declined to offer any executives for interviews. But former colleagues
and analysts said that Mr. Schulman’s pedigree seemed to check all the
boxes for PayPal’s needs.
A
former executive at American Express, Mr. Schulman helped introduce a
prepaid card called Serve, expanding a brand historically synonymous
with an affluent customer base to new segments of the market. He also
led a similar push at Virgin Mobile, where he was chief executive, at
the behest of its founder, Richard Branson, introducing a wave of
prepaid smartphones to young customers.
“He’s
led a lot of different companies into new areas of transformation,”
said Karen L. Webster, chief executive of Market Platform Dynamics, who
worked with Mr. Schulman during his time at American Express. “If you
look at how the payments landscape is changing with new players, it
seems like he’s the right guy for the transition.”
And that combination of experience is crucial, analysts say, to keep PayPal in a leading position in the world of commerce.
But the promise of experience is hardly a cure for PayPal’s deficits.
Former
employees describe the code base on which PayPal is built as antiquated
and out of date. For example, Keith Rabois, a venture capitalist who
was an early PayPal executive, said that the company had failed to
create exciting products over the last decade.
Robert
Peck, an analyst at SunTrust Robinson Humphrey, said, “Just because
they’ve been spun out from eBay doesn’t mean everything is fixed and
O.K. to be competitive with others in the space. It doesn’t fix their
tech.”
Analysts
say Mr. Schulman must push PayPal to make significant advances in
mobile and in-store-purchasing products, areas that PayPal has
historically had to buy its way into. And partnerships with other
companies — like Google and Amazon — may prove to be fertile ground for
future growth after PayPal unties itself from eBay.
But for many of Mr. Schulman’s former colleagues, at least, the future is bright.
“When
you’re building something from zero, there’s a lot of pressure to
deliver,” Ms. Webster said. “He’s someone who has delivered.”
Mr.
Wenig, 47, is more of a known quantity inside the company, having led
eBay’s marketplace unit since 2011. A former executive at Thomson
Reuters, Mr. Wenig has led eBay through a complete website overhaul and a
rethinking of the layout and design for desktop and mobile devices.
At
eBay’s helm, Mr. Wenig will face the growing threat of Alibaba Group,
the dominant e-commerce site in China, which recently made its debut on
the American stock market. And after a security breach earlier this year
that compromised the data of close to 150 million eBay users, Mr. Wenig
must convince consumers that eBay remains a safe place to shop online.
None
of this will happen overnight. EBay expects the spinoff to take nine
months to a year, at least, during which Mr. Schulman and Mr. Wenig will
spend time decoupling their companies and trying to figure out the road
ahead.
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