PayPal restructures to be more lean, as David Marcus keeps his promise to developers
By Sarah Lacy
On October 29, 2012
PayPal’s David Marcus clearly wasn’t just trying to save face when he took to Hacker News earlier this year and told developers that he knew they hated his company and that “This WILL change, and we won’t rest until you all see it.” He added: “The first installments are due very soon. So stay tuned…”
We’re seeing the first inklings of these promised big changes at PayPal today. It’s not in the form of a glitzy press event, rather it’s in the form of an SEC filing. EBay has announced a fourth quarter restructuring charge of about $15 million related to staff reductions at PayPal. Three hundred and twenty five people lost their jobs today, and PayPal ended contracts with an additional 120 contractors. PayPal is restructuring as well, reorganizing nine product groups into one “single, more agile organization,” according to the company’s press release.
The move wasn’t about cost-cutting as much as it was about dramatically changing PayPal’s product and culture — two things Marcus promised earlier this year in that Hacker News thread. From the release: ”The intent is to simplify and speed up how products are developed.”
A $15 million charge isn’t particularly huge news for the markets, but it is a big, honking validation with bright, flashing lights of what we’ve been writing for months: Developers hate PayPal, and now that better solutions are out there, PayPal has gone from untouchable giant to stumbling laggard playing defense.
And that stumbling laggard has a lot to lose now that Square is fighting it at retail, and Braintree and Stripe are winning the business of hot Web and mobile companies like Foursquare, Uber, and Fab. Braintree Payments and Stripe have had a busy run of late with a flurry of funding announcements, acquisitions, major product announcements, and international expansion announcements in a matter of weeks.
We said PayPal should be worried last July, and it clearly is.
When we first started covering this story back then, plenty a commenter pooh-poohed it, citing PayPal’s gargantuan size as an untouchable competitive moat. PayPal most definitely has a long way to fall, and the trio of upstarts nibbling at its heels are still mostly upstarts. But it’s telling that the company itself isn’t nearly as complacent as some of its vocal defenders.
We look forward to seeing what this leaner organization yields in the way of actual innovation.
[Image courtesy greenfaerietree]
Sarah Lacy is the founder and editor-in-chief of PandoDaily.
She is an award winning journalist and author of two critically acclaimed books, "Once You're Lucky, Twice You're Good: The Rebirth of Silicon Valley and the Rise of Web 2.0" (Gotham Books, May 2008) and "Brilliant, Crazy, Cocky: How the Top 1% of Entrepreneurs Profit from Global Chaos" (Wiley, February 2011).
She has been covering technology news for over 15 years, most recently as a senior editor for TechCrunch.
