Dan Schulman of PayPal on Guns, Cash and Getting Punched

Dan Schulman

Dan Schulman, the chief executive of PayPal, knows how to fight.

He climbed to a senior executive role at AT&T before he was 40, jumped ship to work at Priceline when the travel website was still a start-up, then took Virgin Mobile USA from an idea to a business with five million subscribers.

After stops at Sprint and American Express, Mr. Schulman joined PayPal in 2014, overseeing its split from eBay the next year. Since then, PayPal’s stock has more than doubled, quieting doubters who wondered if the online payments company would be a sustainable business over the long term.

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He is also a regular practitioner of Krav Maga, the martial art system practiced by the Israeli military, and has the scars to prove it.

This interview, which was condensed and edited for clarity, was conducted at PayPal’s offices in New York.

What was your childhood like?

I grew up in New Jersey, first Newark and then New Brunswick. We lived in a fully integrated neighborhood. My mom was an activist. She pushed me in a baby carriage at a Martin Luther King Jr. rally. She marched in the civil rights marches, not just in the North but in the South as well. It takes courage to go and do that.

You started working for AT&T right out of school and wound up staying there for 18 years. What did you learn during that time?

Early on in my career I had a family tragedy where my sister died, and I was leading a team at the time. That was a devastating time for me and my family. I had to take time off. I came back several months later and the team had just gelled together to say, “We’re going to cover for Dan. We’re going to do everything.” And when I was presenting to the AT&T board about the accomplishments of this team, I couldn’t take any credit because I deserved no credit.

This idea of the power of giving credit to others — as opposed to your own individual accomplishment — has shaped my entire career. Most people don’t really think about that. They mostly think, “Look at me.” But really if you say, “Look at what others are accomplishing,” it’s so much more powerful in terms of your ability to attract the best people, to get things done.

You left AT&T for Priceline when it was just a start-up. That was a big risk. Why not just stay at AT&T?

I was president of the consumer division at age 39 or so. But my view was not so much that leaving was a risk. I actually thought it’s more risky to stand still. There’s a philosophy in martial arts which is, “Never stand still.” Standing still is asking to be hit. You always have to be willing to take some risks going forward. You can’t stand still.

I have this advice that I give to people I mentor. I always say, “Don’t overthink your next step, because none of us know where we’re going to be 10 years from now or 15 years from now.” One step leads to another.

What changes have you made to PayPal’s organizational structure as C.E.O.?

I’ve taken my team from 21 direct reports to eight direct reports. To me, a great team is one that discusses all of the issues. When you have 21 people, it’s not a discussion; it’s a presentation. There’s no way that 21 voices can be heard around a table. It’s a cacophony of voices. The smaller the team is, the more you can discuss issues in depth and detail, and there becomes a trust among the team.

PayPal was one of the first financial companies to take a stand on guns. How did you arrive at that decision?

If you’re going to have a consistent set of values that you stand up for, they have to be reflected in your acceptable use policy. Around the violence in Charlottesville, we identified a number of groups that espouse hate or violence, and we don’t allow them to use PayPal to fund-raise.

And we do not allow PayPal to be used for guns and ammunition. That there are rules and regulations in terms of background checks is extraordinarily important. But if somebody is going to do something online, we can’t fully vouch for those background checks. And so therefore we just outlaw it.

It’s not always comfortable for C.E.O.s to take a stand on these issues. How do you decide where to draw that line?

Companies, and by extension their management teams and their C.E.O.s, have a moral obligation to try to be a force for good. I don’t think there’s any way that we can shirk that responsibility, and I don’t think there’s any way to fully stand away from the culture wars around us. You have to take a stand. That stand shouldn’t be a political one. But it should be one that is based on your values and your mission.

“I don’t think there’s any way to fully stand away from the culture wars around us. You have to take a stand.”-Dan Schulman, CEO of PayPal

You practice martial arts, right?

I practice Krav Maga. I spent some time in Israel when I was young, and they have what’s called Youth Military Training there, so I started then. That was when I was in my teens, and I’ve been doing Krav since then.

Have you ever gotten hurt?

Oh my gosh. I mean, look at my knuckles. These are all from punches. I’m always black or blue or I have some scar on my face. I’ve dislocated my shoulder. I’ve had stitches. If you look carefully on my face, stitches here, stitches here. Smacked into a mat here, here. That’s how you learn how to be cool, calm and collected in very stressful situations.

But the overrunning philosophy of Krav is that the best way to win a fight is to not get into a fight. It’s very Zen in that way. How do you de-escalate situations? We spend a lot of time thinking about that. It’s translated into the way that I think about business as well.

When we started partnering with Visa and Mastercard and JPMorgan Chase and Citi, nobody ever thought that PayPal would be allies with those companies. That would always be an uneasy friend relationship. But my view is, “How do you give customers the choice they want, and how do you avoid fights that you don’t necessarily need to be in?” And it was maybe one of the key things that catapulted PayPal’s success in recent years.

A reader on Twitter, Kyle Rosenbaum, asked about India’s effort to ban cash. Do you think we’ll see more countries doing that in the future?

There are two mega-trends happening right now in the financial services industry. One: You’re seeing the digitization of payments. People are moving away from checks. People are slowly but surely moving away from cash.

That’s driven by the other big trend, which is the explosion of smartphones. In smartphones, you have all of the power of a bank branch in the palm of your hand. You can do basic transactions at a fraction of the cost and a fraction of the time that it took you before. That can enable so many of these underserved populations to come into the mainstream as well and do things that perhaps you and I take for granted, and it can actually make a real difference in their lives.

The demonetization in India is one of the most audacious and bold experiments that a government has done. India is one of the last places you would think that would try to get rid of cash, but there’s a huge issue that goes on. There’s a huge amount of graft and corruption. But if the government can directly send that money to you electronically, right into a digital account or a bank account, that could be incredibly impactful in that country. Whether it fully works or not, it is a harbinger of things to come.

What do you still use cash for?

I don’t use a lot of cash right now. Things that I used to use cash for, like paying babysitters, now everybody has Venmo and it’s simpler and easier. Some people feel that cash is a more anonymous form of payment, and I would never predict the death of cash over the next decade or two. I think cash is going to be with us for a long time to come. But there is a clear trend toward digitization. It’s just a more efficient, time-efficient, cost-efficient way to managing your money.

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