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← What COVID-19 means for the future of commerce, capitalism and cash

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Showing Revision 19 created 11/30/2020 by Camille Martínez.

  1. Corey Hajim: Today, our guest
    is Dan Schulman, CEO of PayPal.
  2. When most of us think of PayPal,
    we think of buying something online
  3. or paying a friend back
    for a drink using Venmo.
  4. But PayPal has also become
    a major financial services player,
  5. often acting as an alternative
    to a traditional bank.
  6. During this pandemic,
  7. PayPal has supported small businesses
    around the world by providing loans,
  8. waiving fees
  9. and increasing cash back programs.
  10. It has also worked with the US government
  11. on its Paycheck Protection Program,
  12. as well as distributing stimulus checks.
  13. It has enabled an outpouring
    of generosity online as well.
  14. The trend towards digital payments,
  15. or what we might now want
    to think of as "contactless payments,"
  16. has massively accelerated,
  17. and it's changing forever
    how we think about commerce.
  18. So I'm really excited
    to have Dan here with us.
  19. Thank you so much, Dan.
  20. Dan Schulman: Thanks for having me, Corey.
    Pleasure to be here with you.

  21. CH: Glad to see you.

  22. So let's dive right in.
  23. Within a few months
    of this pandemic's arrival,
  24. more than 30 million people
    have filed for unemployment
  25. in the United States alone.
  26. These are certainly unusual circumstances,
  27. but it seems clear we were running
    very close to the edge,
  28. and now so many businesses
    and their employees
  29. are facing huge financial challenges.
  30. How worried are you?
  31. DS: Well, I think the crisis
    has exposed three things.

  32. Obviously, it's a health crisis
  33. for so many people.
  34. Second thing is,
    that health crisis has ricocheted,
  35. and the world is now
    in an economic crisis.
  36. And the third crisis
    that we don't talk so much about
  37. but I think is impacting the way
  38. that we're going to live
    our lives going forward
  39. is: this is a psychological
    crisis as well.
  40. People are reexamining
    their place in the world,
  41. what's happening in the world,
  42. how they're going to live their lives,
  43. both in the pandemic and postpandemic.
  44. And so I think this is something
    that each of those phases
  45. will need to be dealt with.
  46. But you said this,

  47. and I completely agree with you:
  48. there was an economic crisis happening
  49. well before the pandemic exposed this.
  50. It's kind of like
    the water level came down
  51. and exposed what was already there.
  52. You had, for instance, in the US,
  53. 185 million adults in the US
  54. struggling to make ends meet
    at the end of the month.
  55. You have over 70 million adults that are
    really outside of the financial system,
  56. spending over 140 billion dollars
    on high interest rates,
  57. unnecessary fees
  58. and struggling as well.
  59. And so I think
    what this has really done --
  60. because you can't ignore 20,
    25 percent unemployment rates --
  61. it's exposed this crisis
  62. and forced a lot of people into, maybe,
    actions that they might not have taken
  63. without this crisis happening.
  64. CH: Yeah, I think that's right.

  65. There are so many challenges
    and so many opportunities,
  66. and I think you've spoken
    of this opportunity
  67. of digital transactions
    being helpful to people,
  68. and obviously the trend, as you've said,
  69. has massively accelerated and pushed us
    into this world even further.
  70. So I'm curious:
  71. What does the world
    look like without cash?
  72. Or less cash?
  73. What are the advantages
    and what are the challenges
  74. of making that transition?
  75. DS: I think some of the trends that are
    emerging coming out of this pandemic

  76. or coming into it
    and as we look forward is,
  77. clearly, this has been a discontinuous
    change in the trend line
  78. as we move from physical to digital.
  79. I think we've accelerated
    many forms of digital capabilities
  80. by three to five years.
  81. And that can be from digital payments
  82. to telemedicine
  83. to really changing the face of retail
  84. and how we think about retailing,
  85. changing the face of entertainment,
  86. even changing the way governments
    think about managing and moving money
  87. and really thinking about
    digital currencies going forward.
  88. And so I think there are
    a tremendous number of changes
  89. that will occur
  90. during this pandemic and coming out of it.
  91. Digital payments is obviously
    one of the big ones that will happen.
  92. I mean, cash has been around
    for quite some time,
  93. thousands of years.
  94. I would not be so bold
    as to predict its full demise.
  95. Many people have been wrong doing that.
  96. But there is no question right now
  97. that you will see an acceleration
    of the demise of cash.
  98. Last year, you had
    over 18 trillion dollars of cash
  99. spent at retail.
  100. Eighty-five percent
    of the world's transactions today
  101. are done in cash still.
  102. But the really big change right now
  103. towards digital payments,
  104. and that's both the advent
    and the acceleration of commerce
  105. that's happening,
  106. as well as the shift to in-store
    contactless payments, as you said,
  107. and the real impetus for that
    is health reasons.
  108. People do not want to hand over money.
  109. They do not want to touch screens.
  110. They don't want to pick up a pen
    and sign at the point of sale.
  111. And so there is a demand
  112. for contactless payments
    and digital payments
  113. to keep social distancing
    requirements in place,
  114. to protect the health of cashiers,
  115. to protect the health of consumers.
  116. And I think we are going to see,
    we are already seeing in our business,
  117. a surge in digital payments
    across the world.
  118. CH: It seems like a great opportunity,

  119. but how do we make sure
    that this transition is inclusive?
  120. I mean, you've talked about
    how so many people are underserved
  121. by the traditional banking industry.
  122. How do we make sure that those people
  123. have that opportunity?
  124. And it feels like a smartphone
  125. becomes an essential item.
  126. How do we address that?
  127. DS: Yeah.

  128. I do think that a mobile
    is really a key to unlocking this.
  129. I've often said that, really,
  130. one of the big moon shots
    for the financial services industry
  131. is this idea of not just
    financial inclusion.
  132. Most people define financial inclusion
  133. by somebody having
    access to a bank account,
  134. but just having access to a bank account
    is not nearly enough.
  135. I think what we need to aim for
  136. is how do we think about financial health?
  137. How do we make sure
    that people have the ability
  138. to have some wherewithal
  139. to create savings to withstand some kind
    of financial shock to the system?
  140. I do think that mobile phones
  141. will be the way that this occurs
  142. and will be very inclusive going forward.
  143. There are going to be something like
    six billion smartphones in the world

  144. over the next several years.
  145. The cost of a smartphone is plummeting.
  146. I think in India now you can buy
    a smartphone for under 25 dollars.
  147. So you're going to have ubiquity
    of smartphones across the world,
  148. and, in fact, what's very interesting
    is, in lower-income populations,
  149. there is a greater penetration
    of smartphones than in higher income
  150. because the smartphone
    is the only device that somebody has.
  151. Higher-income individuals
    may have desktops or iPads,
  152. that kind of thing,
  153. but lower income can afford one device,
  154. and they choose it to be a smartphone
  155. because they can get and live their life
    through that one device.
  156. And think about that one device.

  157. Really, you have all the power
    of a bank branch
  158. in the palm of your hands.
  159. And when you can start
    to create distribution of services,
  160. financial services,
  161. through a smartphone,
  162. you then are able
    to manage and move money
  163. in ways that we couldn't do traditionally.
  164. In the physical world,

  165. if you get a check,
  166. you need to then go
    to a cash checking place to cash it.
  167. You stand in line for 30 minutes.
  168. They then charge you anywhere
    between two and five percent
  169. to just change the format of currency
  170. from a check to cash.
  171. And then you have cash
    and you want to pay a bill.
  172. You need to stand in line again
  173. at a bill pay,
  174. and then you have to pay maybe 10 dollars
  175. for an individual bill as a fee.
  176. If you do that via a smartphone,
  177. I believe that not only do you save
    a tremendous amount of time,
  178. because if you're outside
    the financial system,
  179. managing and moving money
    is practically a part-time job
  180. to go and do that,
  181. so not only do you save time
    and return time to individuals,
  182. but you can cut the cost of transactions
  183. by anywhere between 50 and 75 percent.
  184. And remember that $140 billion
    number that I gave you?
  185. And that's just in the US.
  186. Imagine if you could cut that in half
  187. and return that to the most
    vulnerable populations
  188. that need it most.
  189. So I think there's tremendous promise
  190. in the use of technology
  191. to help provide both inclusion
  192. and make sure there aren't
    digital haves and have-nots,
  193. but also to start on this journey
    towards financial health.
  194. CH: Yeah, I think a lot
    of people don't realize

  195. that you don't need a bank
    account or even a credit card
  196. to open a PayPal account,
  197. which is super-interesting.
  198. I mean, do you see a time
    where traditional banks don't exist
  199. or at least play a much smaller role
    in the financial services industry?
  200. DS: Well, I think the entire
    financial services industry

  201. is evolving right now,
  202. and so I think banks
    will always play a role,
  203. or as far into the future as I can see,
  204. but it will evolve.
  205. I mean, think about basic credit cards.
  206. Today, you think about a credit card,
  207. and you think about it
    predominantly as a form factor,
  208. something that you pull
    out of your pocket.
  209. Sometimes there's status associated with
    what you're pulling out of your pocket,
  210. depending on the color
    of that credit card.
  211. But really I think those
    form factors start to go away
  212. and become embedded in digital wallets.
  213. So credit will always
    be an important element.
  214. You know, most people in the world,

  215. it isn't that their cash outlays
    exceed their cash intake.
  216. It's just that they're not
    evenly distributed.
  217. So there are times where your
    cash outflows exceed your cash intake,
  218. and there, you need some form of credit
    to make up that difference.
  219. And so I think forms of credit
    will always be an important element.
  220. But the way that you extend credit
    will change going forward,
  221. the way that you think
    about scoring people
  222. in terms of can they handle credit.
  223. You know, traditionally,
    in more developed countries,
  224. you use what's called
    FICO scores or bureau scores,
  225. but those ignore so many
    of the financial transactions
  226. that people who are outside
    the financial system do,
  227. like paying rent
    or paying their bills on time.
  228. And with the data and information
    and machine learning around that --
  229. and we need to be careful
    that there aren't biases
  230. built into those algorithms --
  231. we can start to do things
    that could never be done before.
  232. I'll just give you one quick example.

  233. We're one of the largest providers
    of working capital to small businesses
  234. in the world.
  235. We're probably one of the top five
    in the United States.
  236. So we've done over 14, 15 billion dollars
  237. of lending of working capital
    to small businesses.
  238. Seventy percent of that
    goes to the 30 percent of counties
  239. where 10 or more banks
    have closed branches.
  240. And where do banks close branches?
  241. Banks close branches in neighborhoods
  242. where the median income
    is below the national average,
  243. which makes sense because
    for a branch to be profitable,
  244. they need a certain amount of deposits
  245. for that branch to actually be profitable.
  246. And so, in lower income neighborhoods,
  247. branches are starting to close.
  248. So why are 70 percent of our loans
    in those lower income neighborhoods?
  249. It's because we do machine learning.
  250. We don't even look at FICO scores
    or bureau scores.
  251. We look at a number
    of different data elements.
  252. And so we can lend into
    those lower income neighborhoods
  253. where nobody else can,
  254. and when we do that,
  255. the average sale of a small business
    goes up by 22 percent.
  256. And imagine the impact that has
    on communities and neighborhoods
  257. where they can finally get
    the working capital
  258. to expand those small businesses.
  259. And I think that's a perfect example
  260. of the promise of what technology
    and financial services
  261. married together can do.
  262. CH: I think it's so interesting.

  263. I'm curious.
  264. The tech industry has been criticized
    for amassing power over society,
  265. not that the banking industry
    isn't criticized.
  266. But what do you say about people
    who might be worried about
  267. tech companies taking on
    even more influence and control
  268. over what's happening in their lives?
  269. DS: Yeah.

  270. Well, I think what's so important
    for any company and tech companies
  271. is to respect the boundaries
  272. in terms of what consumers expect
    from a company that serves them.
  273. I think the most important brand attribute
    that a company can have is trust,
  274. and trust comes from the understanding
  275. that a company respects your privacy
  276. and will not sell
    your data or information,
  277. that it can perform transactions
    in a secure manner
  278. so that your transactions are protected.
  279. And I think those
    are kind of foundational,
  280. and I think any company
    needs to respect that.
  281. They need to assure that consumers
  282. have the privacy that they desire
  283. and the safety and security
    that is required
  284. to serve them the right way.
  285. CH: And obviously, you've gained
    a lot of trust with the US government.

  286. Maybe we could talk a little bit
    about how you've been working with them
  287. to distribute some money
    through the Paycheck Protection Program.
  288. And I was curious,
  289. I've been reading about it,
    and it sounds like
  290. 30 million-ish small businesses
    in the United States
  291. are able to get those funds,
  292. but only six million
    have received the loans.
  293. What do you think's happened?
  294. DS: Yep.

  295. Well, I think initially, the government --
    and I give them a lot of credit --
  296. they responded quite quickly
  297. with a 3 trillion dollar stimulus package.
  298. These are massive numbers
    that were happening
  299. in very condensed time frames.
  300. We were working with various agencies,
  301. very closely with the Treasury Department,
  302. in terms of distribution of the stimulus.
  303. And they were working literally
    night and day on this.
  304. The Small Business Administration
    was working night and day.
  305. But these are volumes
  306. that have never been seen before
    running through these systems,
  307. and the first tranche of those loans
  308. was very difficult.
  309. There were a lot of technical difficulties
    in getting those out to small businesses.
  310. And that first tranche was not enough,
  311. and it was quickly used,
  312. and there are still
    a host of small businesses
  313. that needed money.
  314. The second tranche that came out

  315. is still actually in effect.
  316. It has not been used up,
  317. and we are continuing to lend on that.
  318. We've been able to lend
    to some 50,000 small businesses.
  319. We've lent out about 1.7 billion dollars,
  320. and our loan size,
  321. which really I'm proud of,
  322. is about 31,000 dollars.
  323. The average that a bank does
    is between 100 and 125,000 dollars.
  324. So we are lending
    to these true small businesses
  325. on Main Street,
  326. and I'm proud that we've
    been able to go do that,
  327. and I think we should give credit
    to the US government
  328. and governments around the world
  329. that are taking this quite seriously
  330. and putting a tremendous amount,
    a percentage of their GDP,
  331. towards the rescue of small businesses
  332. and towards trying
    to take care of consumers
  333. that find themselves
    in really difficult straits right now.
  334. And we've been trying to,

  335. instead of people mailing out checks,
    which is ridiculous in today's world --
  336. people aren't living where they think
    they're going to be living,
  337. they're with their parents or with friends
    or in a different location,
  338. and mailing a check
  339. and then having to take a check
    and go somewhere,
  340. which you can't even go
    if you're sheltered in place,
  341. to cash it,
  342. doing that electronically
    just makes a ton more sense --
  343. and we've been working
    with the IRS and Treasury
  344. and other government agencies
    to distribute that electronically.
  345. CH: Yeah, that makes a lot of sense.

  346. It's a massive, massive project
  347. for all of us.
  348. Whitney is here with some questions
    from our community.
  349. DS: Hello, Whitney.

  350. Whitney Pennington Rodgers:
    Hello Dan. How are you?

  351. So the community has
    some interesting questions
  352. following up on what you
    were talking about earlier about security.
  353. We have a question from Marc --
  354. and I apologize in advance
    if I mispronounce your name, Marc --
  355. Marc Vanlerberghe:
  356. "The move to digital cash
    could be one more step
  357. towards creating the perfect
    surveillance state.
  358. How do we avoid this from happening?"
  359. DS: Yeah, well, this is what
    I was talking about, Marc, before.

  360. I mean, I think this idea of trust
  361. is incredibly important.
  362. I think the only companies
    that will be successful --
  363. and I think we hold a lot of this
    in our own hands as consumers, by the way;
  364. we need to be aware of data
    and information that we're giving
  365. and to what companies
    we're doing that with --
  366. but I think the companies
    that will be successful
  367. are those that have
    a high degree of trust,
  368. and trust happens
    by protecting your privacy
  369. but also very much assuring
    that your transactions in a digital world
  370. are safe and secure.
  371. I mean, the idea of cybersecurity
  372. has always been important,
  373. but is ever more important
    as we move from physical to digital,
  374. and that's where
    large data sets are important,
  375. because a consumer's identity
    is stolen every two seconds.
  376. Every two seconds, some consumer
    has their identity stolen.
  377. And so we have to be, for instance,
  378. we have to be sure
    that even when you sign in
  379. with your credentials,
  380. they're actually real credentials.
  381. We have to look at 30 to 100
    different elements of that transaction
  382. to make sure it's really you
  383. before we let that money
    out of your account.
  384. And so there is a combination
    of making sure you have enough data
  385. to protect somebody
  386. but also assure that your privacy
    is held sacrosanct,
  387. and I think that is a balancing act
    and one that needs to happen
  388. in order for us to do this successfully.
  389. WPR: Great, and actually sort of going
    from digital cash to digital currency,

  390. we have another question
    from Simone Ross in our community
  391. about the opportunity that exists
    for digital currency.
  392. She mentioned that PayPal
    pulled out of Libra.
  393. What would it take for a truly inclusive
    digital currency to take hold here?
  394. DS: Yeah.

  395. I think there is a tremendous
    amount of promise
  396. as we think about digital currencies.
  397. Our pulling out of Libra
  398. had nothing to do with our firm conviction
  399. that blockchain and other forms
    of maybe stable coin currencies
  400. are extremely important
  401. and can be very, very helpful,
  402. especially in different
    parts of the world.
  403. As we think about stability
    in different parts of the world
  404. where currencies
    can fluctuate up and down,
  405. to have a more stable currency
    where somebody can know,
  406. if they have that,
  407. that it's going to be worth x amount,
  408. and that they can transact,
  409. either with other individuals
    around the world
  410. or, importantly,
    at merchants around the world.
  411. And we are looking at all forms
    of digital currencies right now,
  412. working hand in hand
    with a number of different governments,
  413. and I think we should all think about
    how technology is going to evolve
  414. and how currencies will evolve
    as a result of that.
  415. And I think this crisis
    has really opened the eyes
  416. of many governments around the world
  417. as to the need for different tool sets
  418. to create stimulus
  419. and to efficiently and quickly
    and effectively distribute funds
  420. to their citizens.
  421. WPR: Great. Well, I'll be back shortly
    with more questions,

  422. and I'd just love to remind the community
    that you can ask questions
  423. on the "Ask question" feature.
  424. Be sure to use the pull-down tab
    to select Episode 2,
  425. so those questions come.
  426. Thank you.
  427. DS: Thanks, Whitney.

  428. CH: Thanks, Whitney.

  429. Dan, I want to go back to something
    we touched on in the beginning
  430. about financial wellness.
  431. PayPal has done something unique
  432. in terms of calculating
    how much to pay people
  433. and how much you should spend on benefits.
  434. Traditionally, wages
    are set by the market,
  435. but you've found that paying
    as much or even more than other companies
  436. wasn't always enough.
  437. Can you tell us about that moment?
  438. DS: Yeah.

  439. So I said, kind of, in our opening,
    in one of my opening statements,
  440. that two-thirds of Americans
    struggle to make ends meet
  441. at the end of the month.
  442. They are financially stressed,
  443. and it kind of wreaks havoc in their life.
  444. I did a study to look at PayPal employees.
  445. We did a research study,
  446. and I did it because I thought I was going
    to get back this great information
  447. that I was going to talk about
    at an employee meeting
  448. about how well we pay,
  449. because we pay, to your point,
  450. at or above market
  451. in every single location around the world.
  452. And what I found is, unfortunately,
    like the rest of the world,
  453. even though we paid at market
    or above market,
  454. 60 percent of our operations personnel,
  455. our entry-level employees,
    our hourly workers,
  456. face the same thing.
  457. They struggle to make ends meet.
  458. And that was simply unacceptable for me.
  459. I think the world is changing

  460. in terms of the responsibility
    of corporations,
  461. the responsibility of CEOs.
  462. We have a lot of different stakeholders
    that we try to satisfy,
  463. from regulators to shareholders
    to customers to employees.
  464. But I think the number one
    responsibility that we have
  465. is the health -- financial health --
    of our employees,
  466. because nothing could be
    more important to a company
  467. than to have financially secure,
    passionate employees working for you,
  468. because nobody is going to serve customers
  469. better than employees
    who feel a part of something
  470. and feel financially secure and glad
    to be a part of that company.
  471. And so then the real question becomes:
    How do you measure that?

  472. Because a lot of people think
    about living wages or a minimum wage.
  473. And we thought that was insufficient,
  474. and we came up with a measurement
    we called "net disposable income,"
  475. which is, basically:
  476. After you pay taxes and
    your basically essential living expenses,
  477. how much money do you have
    left over for discretionary things
  478. or to save?
  479. And here's the really unfortunate thing --
    and I'm not proud of this,
  480. but remember, we were paying
    at market or above,
  481. so I thought the market would
    take care of this, right, by doing that --
  482. we found that for that population,
  483. they had four to six percent
    NDI, net disposable income,
  484. after paying taxes
    and essential living expenses.
  485. That is not enough.
  486. You are going to struggle
    to make ends meet.
  487. And by the way, NDI changes
    location to location to location
  488. around the globe, right?
  489. There's a different NDI in Manila,
    a different NDI in Omaha, Nebraska,
  490. than there is in New York City, etc.
  491. And so we basically
    said to ourselves,
  492. we need to take
    NDI to 20 percent.
  493. Because at 20 percent --
  494. and that's a huge shift,
    from four to six to 20 percent --
  495. but at 20 percent,
    you actually have the ability to save
  496. and to put money away and to take care
    of discretionary expenses.
  497. And so we did a pretty
    massive reorientation

  498. of our compensation systems.
  499. We lowered the cost
    of benefits by 58 percent,
  500. because benefits
    are like a regressive tax,
  501. you pay the same amount
    no matter what your salary is.
  502. And so we had a lot of employees
    who weren't taking health care benefits,
  503. because it cost too much
    to be able to do that.
  504. So we lowered it by 58 percent.
  505. We made every single employee
    of PayPal a shareholder
  506. and an owner of the business,
  507. and we gave them pretty big grants
  508. so that they could be a part
    of the success of PayPal going forward.
  509. We raised salaries where we needed
    to go and do that.
  510. And then we wrapped all of that
    into a financial education program,
  511. because people had never
    gotten equity before,
  512. they were trying to think through,
  513. "How do I save now that I've got
    incremental dollars to go and do that?"
  514. And that cost us quite a bit
    of money to go and do that,
  515. but I really feel,
  516. just like how we spend a lot of money
    to take care of customers,
  517. as you mentioned up front, in COVID-19,
  518. that companies need to stand
    for more than just making money,
  519. for more than just maximizing
    our profits next quarter.
  520. I firmly, firmly believe
  521. that the costs associated
    with taking care of our employees,
  522. taking care of our customers,
  523. will benefit us in the long run
  524. multiplefold over the costs
    associated with doing that.
  525. And we're already beginning
    to see some of the impact of that.
  526. And so, I think every CEO, every company,

  527. needs to really now start to think about,
  528. especially maybe
    as a result of this crisis,
  529. but as I mentioned,
    we had a crisis before this,
  530. how do we put our employees first,
    take care of them?
  531. Because if you do that,
    you'll take care of customers,
  532. and if you take care of customers,
  533. you'll take care of
    shareholders, inevitably.
  534. And so this has been a huge part of it
  535. about for the last year or so.
  536. CH: It's so interesting,

  537. and it brings up
    so many questions, I think,
  538. for me and probably our community as well.
  539. I mean, PayPal is a hugely
    profitable tech business,
  540. huge free cash flow and big margins.
  541. Do you think this model is something
    that every company can do,
  542. whether it's a tech company,
    a manufacture, a meatpacking business?
  543. I mean, is this what everyone
    should be focused on?
  544. DS: Well, I think that --
    and I don't want to moralize

  545. or tell other companies
    what they should do --
  546. but to me, I think
    everyone should understand
  547. the financial health of their employees.
  548. That's a baseline thing to go do.
  549. What you do post-that
  550. is up to maybe your
    financial strength as a company
  551. or where you put your order of priorities.
  552. But what I've found is,
  553. I thought the market could tell you that,
  554. and this is why I say, in many ways --
  555. you know, I'm a big believer
    in capitalism.
  556. I think it's, in many ways,
  557. the best economic system
    that I know of.
  558. But, like everything, it needs an upgrade.
  559. It needs tuning,
  560. and at least for
    these vulnerable populations,
  561. just because you pay at market
  562. doesn't mean that they have
    financial health or financial wellness.
  563. And I think everyone should know
  564. whether or not their employees have
    the wherewithal to be able to save
  565. to withstand financial shocks,
  566. and then really understand, like,
    what can you do about it?
  567. I think this NDI measure
  568. is a really interesting one.
  569. It takes some time to go do it,
  570. because you have to be quite thorough
  571. and you have to really understand
    living expenses by location
  572. and what tax jurisdictions there are.
  573. But you need to create an NDI
  574. that's to a certain level
  575. where people aren't struggling
    to make ends meet.
  576. Because if people are struggling
    to make ends meet,
  577. they are not as productive at work.
  578. They're worried about, like,
    what am I going to do with my kids?
  579. My kid just got sick.
    I don't have health insurance.
  580. I think there's a spiral that occurs.
  581. You think you're actually saving money
  582. by paying less,
  583. but the reality is,
  584. at least in my belief system,
  585. you take care of your employees,
  586. and other things naturally flow from that.
  587. They are more productive.
  588. They love being a part of that company.
  589. They take care of customers better.
  590. And all of those things
  591. inevitably accrue
    to the benefit of a company
  592. in terms of how it's trying
    to serve its ultimate end market.
  593. But it starts with your employees.
  594. CH: So obviously you believe
    in this "capitalism needs an upgrade,"

  595. and I think NDI is something
    so many companies should adopt.
  596. But do you think this happens
    through benevolent corporate activity?
  597. I'm channeling my inner Bernie Bro here,
  598. but I think a lot of people
    would be skeptical
  599. that we should trust companies
    to do better at this point.
  600. Should the government step in
    to raise minimum wages,
  601. do other things to protect workers
    in a more structured way?
  602. DS: Look, I think the government
    clearly has a role to play,

  603. and I think the private and public sectors
  604. need to work closer together
  605. to address so many of the issues
  606. that we face in our societies
    across the world,
  607. whether that be income inequality,
  608. environmental issues,
  609. health,
  610. protections, that kind of thing,
  611. privacy.
  612. But the way that I think about this is,
  613. it's very difficult for governments
    to regulate around this,
  614. because there are so many
    different ways of thinking about it.
  615. If I were another CEO,

  616. and this is like,
  617. it's actually in your best interest
  618. to go and do this
  619. because it's a competitive advantage.
  620. Like, we attract, I think,
  621. some of the best talent in the world
  622. to PayPal,
  623. because we have a mission
    that people believe in,
  624. that we actually are trying to make
    some sort of positive difference.
  625. I'm not saying we're
    the be-all and end-all,
  626. but I don't think people
    should shirk their responsibilities
  627. of at least making a small difference
  628. going forward.
  629. If enough companies did that,
    if enough governments did that,
  630. it would make a real difference
  631. in the world.
  632. And then the second thing is,
  633. you have to have values that support that.
  634. And those values are incredibly important.
  635. Those values should be
    all about inclusion.
  636. They should be about
    having a diverse workforce.
  637. They should be about financial wellness.
  638. And when you do that,
  639. and you attract the very best talent,
  640. then by definition,
  641. I think the single biggest
    competitive advantage for any company
  642. is their workforce.
  643. Strategies are great.
  644. A whole number of things are great.
  645. You have a great workforce
  646. that's passionate about what they're doing
  647. and is financially secure,
  648. and they will do amazing things.
  649. And I think it's that kind
    of competitive advantage
  650. that will spur companies.
  651. So there needs to be
  652. a set of CEOs and companies
  653. that start to move in this direction,
  654. and I believe you're beginning
    to see more do this.
  655. And once that happens,
  656. it starts to tip everything,
  657. and I think more and more need to do it
  658. to maintain their competitive positioning.
  659. And that may seem like a self-serving way
    why people are doing it,
  660. but honestly,
  661. I don't care whether they're doing
    it out of the goodness of their heart
  662. or they're doing it
    because it's competitively a disadvantage
  663. if they don't.
  664. Creating financial health
    for our employees is the goal,
  665. and we've got to get that done.
  666. CH: Yeah. I mean, it sounds like
    you think of this as a win-win,

  667. but it also sounds like you're willing
    to maybe think about your employees first
  668. and sell it to your shareholders later.
  669. Whitney is -- oh sorry, go ahead.
  670. DS: No, no, no -- I was just going to say,

  671. I actually do believe that,
  672. and I think the idea
    of a multistakeholder capitalism,
  673. that is a time for today,
  674. and we cannot just think
  675. that we have one stakeholder
    that we need to satisfy.
  676. We live in our communities,
    we live in this world.
  677. To have people struggling
    day in and day out
  678. is not good for any company, and ...
  679. We can only do x amount,
  680. but we can actually create
    financial health for our employees,
  681. and we should.
  682. WPR: Great. So we have so many questions
    coming in from the community.

  683. One here is from Lara Pearson,
  684. basically about whether PayPal
    would consider become a B Corporation.
  685. "Are you familiar with
    the B Corp movement,
  686. environmentally and socially responsible,
    multiple-bottom-line for profits?
  687. Presuming so, has PayPal considered
    or would it consider
  688. becoming a certified B Corporation?"
  689. DS: Yep. I'm familiar with B Corp.

  690. We have no intention to move
  691. to becoming a B Corporation.
  692. I think the values
    and what we are trying to do
  693. are very aligned with assuring
    a multistakeholder point of view,
  694. but what I really want
  695. is for this to be a movement
  696. across major corporations
    across the world.
  697. And you're not going to have
    major corporations around the world
  698. moving into B Corp.
  699. There's a lot of other
    side issues involved
  700. with being a B Corporation
  701. as opposed to just
    a publicly listed company,
  702. and so that's going to be
    a long way before that happens.
  703. And so what I'm
    really trying to do is
  704. encourage and demonstrate
  705. that being multistakeholder,
  706. that putting employees first,
  707. creates competitive advantage.
  708. And I think I'm not the only CEO
    who's feeling that, by the way.
  709. I think people like Satya Nadella
    from Microsoft are doing a great job,
  710. Marc Benioff from Salesforce.
  711. I could go through quite a list of names.
  712. But the list is not long enough yet,
  713. but I think there's some
    quite important names
  714. and individuals around the world
  715. who are now talking about
    multistakeholder capitalism,
  716. and I think that's an important element
    as we think about our economies
  717. and way of life looking forward.
  718. WPR: And there was so much interest also
    in your net disposable income program

  719. and a lot of questions around that,
  720. and one which I think is
    along these same lines from Juan Enriquez
  721. asking about a rational way
    to address extreme income disparities.
  722. And perhaps you could expand
    beyond this program,
  723. just sort of ways
    that we might think about this
  724. in a smarter way moving forward.
  725. DS: Yeah.

  726. Well, there's no easy solution,
    or it would have been done.
  727. So I think there are a couple things
    that I think about
  728. that may not fully address
    extreme income disparities.
  729. Again, I try to think pragmatically
    about these things,
  730. and, like, what can we really do
    to start to address this?
  731. And again, I think about,
  732. if we could take one step
    and then another step,
  733. then you're starting your journey,
  734. and without getting overwhelmed
    by how far away the end state is.
  735. So one, I think companies
    need to take care of their employees,
  736. and I think that will
    immediately help to address
  737. some of these income disparities.
  738. Number two, I do think that,
  739. ironically, if you have less money,
  740. it costs you more to manage and move it,
  741. which, think about that:
  742. the less money you have,
    if you're outside the financial system,
  743. the more you spend to manage
    and move your money.
  744. And I think that technology

  745. is at least a foundational way
    for us to think about
  746. how do we cut the basic costs
    of managing and moving money
  747. by 50 to 70 percent,
  748. like [check-cashing],
  749. sending remittances,
  750. which are such a huge,
    important part of the world's economy.
  751. You know, you do it a traditional way,
  752. you go into a store
  753. and send the remittance to another store
    and somebody goes and picks it up.
  754. First of all, incredibly time-consuming,
  755. and it can cost between
    eight and 12 percent
  756. of that remittance amount
    that you're sending.
  757. So if you're sending a hundred dollars,
  758. the recipient who so desperately needs it
  759. is getting 88 to 90 dollars.
  760. If you do that electronically,
    digital wallet to digital wallet,
  761. that can be like three percent,
  762. so you can get 97 dollars from that.
  763. And so I think there are ways
    of addressing the costs.
  764. As I mentioned,
  765. there is so much money
    spent on unnecessary fees
  766. and high interest rates,
  767. and if we can drop that
    by 20 percent, 30 percent,
  768. the amount of money we can return
    to vulnerable populations is quite large
  769. and will start to make a difference.
  770. WPR: That's great.

  771. We have a ton of questions
    from the audience,
  772. just one more before we turn things
    back over to Corey
  773. with her final questions.
  774. This one is from Anna Tunkel,
  775. which is just, I think, as we are rounding
    to the end of the interview here,
  776. "What are you most optimistic about,
  777. and what do you see
    as the biggest opportunities
  778. for 'Building Back Better' after COVID?"
  779. DS: Well, I mean,

  780. one thing I'm actually optimistic about --
  781. and I've always been a believer
    in the human spirit
  782. and the power of an individual
    to make a difference.
  783. I know that sounds very cliché,
    but I truly believe it,
  784. and I think every one of us
    can make a difference.
  785. But here's what I'm seeing.
  786. I'm beginning to see that
    at a much larger scale
  787. than I've ever seen before.
  788. You know, we have different platforms,
  789. either the PayPal platform
    or the Venmo platform,
  790. Venmo here in the US,
    PayPal across the world.
  791. The amount of giving that's happening
    through those platforms,
  792. whether it be to local businesses,
  793. to artists, to musicians,
  794. to bartenders,
  795. to places of worship, to schools,
  796. to NGOs, to charities
  797. has exploded on the platform, exploded.
  798. We have helped to raise
    on the PayPal platform
  799. since COVID-19 struck
  800. 2.8 billion dollars
    for NGOs and charities --
  801. 2.8 billion.
  802. That's incredible,
  803. the amount of generosity
    that is pouring out
  804. from the global community around this.
  805. And we're just seeing people
    randomly pay it forward.
  806. Somebody gives 20 dollars to a bartender,
  807. and that bartender takes
    10 dollars of that
  808. and gives it to somebody else.
  809. And we're watching that over our platform,
  810. and that gives me a sense of optimism.
  811. I also feel like this period of time

  812. has exposed a number of things
    that were happening
  813. but were invisible,
  814. and I think when things become visible,
  815. that's when you can start to address them,
  816. and I think there's a lot of attention
  817. on some issues that
    should have had attention before,
  818. but vulnerable populations
    don't have as loud a voice as others,
  819. and now that voice is being heard,
    because you can't ignore it.
  820. And hopefully, that will create progress
  821. against some of these
    structural inequalities
  822. that have been there for a long time.
  823. WPR: That's wonderful.

  824. And there's so much interest online.
  825. You have some other questions
    to ask as well.
  826. CH: So I think we have one more
    from our community

  827. from Jacqueline Ashby.
  828. Anna sort of stole my last question,
  829. which was to restore
    our faith in humanity.
  830. But, there's so much interest
    coming in about NDI.
  831. Is there a way for people to learn more,
  832. for you to share your study
    and your methodology?
  833. DS: Happy to do so.

  834. There is nothing proprietary about it.
  835. We would love for this to be --
  836. look, and this may not be
    the be-all and end-all measurement.
  837. It's the best one we could come up with,
  838. but if working within the community,
  839. we can evolve it and think about
    maybe things that it missed
  840. or maybe things that could be done better,
  841. that would be fantastic.
  842. I don't know the best way of doing that.
  843. I'll leave that to Corey and Whitney
    to help me think that through,
  844. but of course we'd be willing to share it.
  845. There is nothing about that
    that I don't want to share.
  846. CH: Sounds like a good TED Talk.

  847. Thank you so much, Dan. This has been
    a super-interesting conversation.
  848. I think we could talk for another hour,
  849. but thank you so much for being here.
  850. DS: Thank you, Corey. Thank you, Whitney.
    Thank you, everybody.

  851. WPR: Thank you, Dan. Thank you.