PayPal puts principles first – despite the haters
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PayPal puts principles first – despite the haters

Online payment giant PayPal came from humble beginnings: once eBay’s in-house system, the company is now a worldwide major player in the ecommerce trend. But getting there hasn’t been easy – and the company has annoyed plenty of people along the way. The reason for that is that PayPal, perhaps more than any other Silicon Valley heavyweight, is unwilling to compromise on its principles. That means a lot of shady sellers have been left with gripes after being kicked off its platform. But this might be just the kind of self-regulated, principles-first, stance that resonates with users in these dark days of Big-Tech betrayal.

PayPal’s share price has increased by 22% year to date

graph 1209 paypal

SOURCE: Yahoo Finance

Speaking to the Financial Times, PayPal’s CEO, Dan Schulman, admits that he keeps his favourite examples of “backlash on social media” to remind him of some of the difficult decisions he has had to make. Many of those include refusing to deal with entities, individuals, or organisations that are involved in “the promotion of hate, violence, racial or other forms of intolerance that is discriminatory.”

This isn’t always easy to define – the line between genuine political stances and prejudice are often fuzzy (take the so called “alt-right” that mobilised to support the Trump campaign in the last U.S. general election: they operate as a legitimate political group, but gently advocate the creation of “ethnostates” to enact a kind of global apartheid. In these cases, Schulman is ruthless: err on the side of caution and ditch anyone that strays too close to the line. In other words: put principle before profit.

That might have been the kind of thing investors would have flinched at a few years ago. But today, when Facebook is under fire over political advertising and privacy breaches, and Google is being protested for taking military contracts and trying to re-enter China, a tech company that sticks to its guns (metaphorically speaking) might be just what the market ordered.

When it comes to picking a side, that’s certainly the way Schulman sees it. He told reporters: “You have to have courage to make those decisions,” he says. “If you don’t, it puts you in a worse spot, because then people don’t know what you stand for. And that’s the worst of all places.”

Disclosure

Dominion holds PayPal in its Global Trends Ecommerce Fund.


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