Working With A Corporate, Teppo Paavola - Global Webit Congress - GWC 2014

Tempo is coming from a big bird called PayPal. I've never been working in a huge company. I actually did it back in 1993, Columbia TriStar, and that was it, it was a couple of months. And then I did everything from scratch. I'm that kind of a person. I push and then I got stumped something new. So how is it to work if this is a talent pool for you? How is it for entrepreneurs to work for a big company like PayPal? It's of course awesome, right? So I've actually been on the other side as a startup entrepreneur quite a few times. So the difference of being in a big company is that especially if you're a sponsor like we are, you can present whatever over here and you're not going to have Mike bitching afterwards. Put the trust, okay.

So why would you want to work with a big company? One of course is selling to a big company, that's typical, that's what many small companies need to do. But this is more about how do you partner with a bigger company. So as I have two minutes and 47 seconds left, somehow the clock works very differently with me than the other guys. Okay, there we go. So I'll go very quickly through the where do we come from. You can integrate your products and that's why we have the developer team that's here helping you to do that. That's the startup program. I think on the right hand corner it's as bad for you as it is for me. And I'll say a little bit more about that. You can have a commercial partnership and basically use our distribution, or of course there is always the possibility of being acquired by a bigger company.

So in the developer side, in getting integrated, you've got APIs, you've got SDKs that should help you get going. And in identity, we consider ourselves as the commerce identity. So if you have customers who use PayPal, they remember PayPal passwords, you can use that for your own sites and in that way get access simpler and also get some data about the customers that you otherwise would not get.

A couple of words on our startup program. This is done in cooperation with a bunch of leading incubators. We're basically giving our service for free, which means in practice we're making a loss on all of these startups, hopefully just for a short while, and then after that it's all going to be great for everybody. We also not just give stuff for free, but actually we work with the incubators in helping the startups monetize their products and similar kinds of advisory activities. And there are certain rules on the right-hand side of what if you want to apply, what does it require.

Then on the commercial partnership, we think about in this case PayPal but this applies to a lot of other companies. So we have two kinds of customer bases that you could be interested in. One is the merchant, so people who sell stuff on the web, on mobile, and increasingly also sell stuff in the real world, brick and mortar. If you have something of interest that could be interesting for those merchants, one possibility is that you actually use us as a channel to sell to those merchants. On the other side you see the consumer apps. So PayPal is an end to end network, so you have both merchants and consumers. We ship a wallet. In general, the eBay Inc. different apps have been downloaded more than 100 million times. We are targeting to have our mobile wallet with most of our customers. Over there, there are different ways to, and I can separately talk more about it offline with anyone who's interested about how to be part of that wallet. We're making it more and more open, and there are different kinds of openness and how you can leverage that.

Here's one company whose name is conveniently up there in the part that you don't see anyway. So that's Eat24. We just launched a completely new version of our mobile wallet app, a complete rebuild. One of the launch partners we had was Eat24. In practice, it means that they aggregate restaurants, and those restaurants you now see in the PayPal app. You go into Shop and find the list of those restaurants. In the early days, the 100 plus thousand that they've got revenue, actually 25 percent of those customers of PayPal customers that they have now acquired are now Eat24 customers, and they have come back for a second round. So you're starting to see some sort of habituation, customers are coming back.

So I asked one of our colleagues in our M&A team to go and ask the people that were in those companies that we acquired and ask them: now that you have lived through the acquisition and are part of PayPal, what would you say to a startup if they asked you does it make sense to be acquired and under what circumstances? So these comments are all real comments from real people that used to be in companies that were acquired by PayPal. But you could get the same kind of thing from any business book. So why would it make sense and what do you have to believe? The first thing of course is that you have built a product, you want to access that other company's bigger distribution and be the primary service in that area. So you can get to scale in multiple ways. And for many entrepreneurs, that's one of the dreams: to see hundreds of millions of people using something you have built. The other of course is: okay, there's money on the table, take it. That may be the right choice in different situations, always your call. But you do have to, it's going to be tough for you working in the acquiring company if all you built was something that didn't scale. Typically in an acquisition, you're married to the company for multiple years afterwards. So hopefully you also believe that it's not just a one time cashing out. Streamlining processes and being able to focus more – many early stage companies, especially product and technology focused, don't necessarily want to build all their HR and finance functions. So now if you're part of a bigger company, you can get them from your acquirer. Those are all good things.

So what do you have to then believe for it to feel good even several years after the acquisition? There has to be a joint vision, you believe in the same thing as the acquirer, you believe that there is a market for your product, you believe in how you go to market. And from a little different angle, there's a fit. If you don't see an interesting role for yourself, it might be rather painful to just hang around. What is a VIP short for? Best in peace? Vesting in peace. You don't want to get into that stage. So you have to feel that there's a fit for you personally as well, not just for your business. And then you have to understand that there are some big company limitations. For example, for a decision to be made, several people have to agree, which may take longer than you're used to. I see that in our company because half of our top management came through acquisitions. You have lots of people who have led smaller companies, used to doing a decision in the morning and assuming by afternoon it's being executed. It's not always like that in a company with thousands or tens of thousands of people. So those are basically things to think about. And that's it.