Dan Schulman
President & CEO of PayPal
“People always talk about in Silicon Valley about innovation and pushing forward…but if you're going to do that, you have to fail along the way. There is no way that you can be an innovative company without trying a lot of things. Failure is the other side of innovation.”
Summary
In this episode of Leadership Matters, Alan and his good friend Dan Schulman discuss what makes someone a successful leader, including innovation and vision.
They discuss how Dan grew up in a family of social activists, which taught him to be a “customer champion.” Dan got his MBA from NYU at night, working in manual labor during the day to help him afford to live. Dan’s loss of his younger sister to a brain aneurysm helped him reorient his life and focus more on the accomplishments of others that were on his team than on his own accomplishments. Dan became the President and CEO of PayPal in 2014, where he has used his roots in social activism to better the company for all employees, including increasing salary and benefits.
Mentions & Resources in this Episode
JUST Capital's and Forbes’s The Just 100: Companies Doing Right by America – Click here to learn more.
Fortune Change the World company – Click here to learn more.
The Council for Economic Education – Click here to learn more.
Fortune’s Top 20 Businesspersons of the Year – Click here to learn more.
Brennan Legacy Award – Click here to learn more.
Richard Branson – Click here to learn more.
Middlebury College – Click here to learn more about Dan Schulman’s alma mater.
NYU MBA – Click here to learn more about NYU’s MBA program.
Krav Maga – Click here to learn more about Krav Maga.
The Bathroom Bill – Click here to learn more about the Bathroom Bill.
Guest Bio
Daniel H. Schulman, born January 19, 1958, is an American business executive. He is President and CEO of PayPal, formerly serving as Group President of enterprise growth at American Express. Schulman was responsible for American Express' global strategy to expand alternative mobile and online payment services, form new partnerships, and build revenue streams beyond the traditional card and travel businesses. Previously, he served as president of Sprint's prepaid group and the founding CEO of Virgin Mobile.
Among his many awards and accolades, Schulman was recognized by the Brennan Center for Justice with its Brennan Legacy Award, named after the Supreme Court justice, for his contributions to democratize financial services and build a more inclusive global economy. Schulman was named to Fortune’s 2021 list of the World’s 50 Greatest Leaders, which recognizes those who in unprecedented times "stepped up to make the world better, and inspired others to do the same."
Follow Dan on Facebook, Twitter, or LinkedIn.
Clips from This Episode
Episode Transcription
Alan Fleischmann
It's my pleasure today to welcome to Leadership Matters the CEO of one of the world's most recognized and loved companies, Dan Schulman, CEO PayPal. Dan has become one of America's most revered leaders for a number of reasons. He has helped democratize and transform the financial services and e-commerce industries, making it easier for people to transact with one another and with companies. On top of being an industry visionary, Dan is known for leading with his head and his heart. When you try googling Dan Schulman it's virtually impossible to find a photo of this man wearing a tie. He doesn't look like the part or doesn't take on the part of the traditional financial services CEO and his look, but actually not even in his actions. He has an eclectic, has an eclectic background to match. The ad has managed to lead PayPal to exceptional growth and innovation, while also contributing to the common good. He's an expert, as I'd like to say, in marrying value and values. Under Dan's leadership, PayPal has been named to JUST Capital's, and Forbe's Just 100 List of companies doing right by America and recognized as a Fortune Change the World company. Dan is the recipient of the 2017 Brennan Legacy Award, established to honor the supreme court justice and his career, his long career committed to social justice and common human dignity. The Council for Economic Education named Dan as its 2017 visionary for promoting economic and financial literacy to create a better informed society. He's been named one of Fortunes top 20 Business Persons of the Year for three years, and has been lauded for his leadership, his innovation, creativity, his support for entrepreneurs, and his commitment to improve the lives, the financial lives, of people all around the world. And at a time when the world is looking for leaders who will help build a more inclusive economy following this pandemic, Dan is calling for the business community to rethink capitalism. We're looking forward to hearing more about that in particular today. And I just want to welcome you, Dan, to leadership matters. And a personal note, I should say, I've had the great fortune of knowing members of your family for a long time. And I've gotten to see you in action in different places, both in the United States and abroad. And the one thing that is so consistent about you, Dan, is that you lead with confidence, but also with humility. This has never been about you. So getting you on this show was not easy. It was almost impossible. And I used every level of influence I had and persuasion to get you on the show. So I am even more grateful that you're taking the time today to be with us.
Dan Schulman
Alan, thank you so much for having me. And that is a very, very kind introduction. Thank you.
Alan Fleischmann
Well, every word, I could have gone more. You know, I love I'd love to start with you a little bit at the very beginning to get a little bit of your story to our listeners. Both of your parents were active in civil rights, they were active in the civil rights movement. You actually attended your first protest in Washington, I think when you were still a baby, if I'm not mistaken. Certainly in the baby carriage. Tell us a little bit about your parents activism and how that impacted your values and the way you look at the world.
Dan Schulman
Yeah, well, I come from a long line of social activists, even my grandfather was a social activist. He was a union worker in New York City, in the garment district and really stood up for workers rights, at great danger to himself. My mom and dad followed in his footsteps, whether that be for civil rights. My dad once had to travel down to Mississippi, in the middle of the entire civil rights movement, because one of his workers, a black employee, had been fired for drinking at the wrong water fountain. And he travelled down there to basically say that that was not acceptable. And I remember being at home and my mom being very worried about my dad taking what, at that time was quite a courageous action, to stand up for an injustice. And it's just been a part of my life. And I've learned from a number of people. It's not just my parents, you know, I've learned from teachers along the way like Richard Branson, who taught me a lot about what it means to be a customer champion, to think about businesses being a force for good and so I've had a lot of great role models along the way.
Alan Fleischmann
Was that a tough decision for you to embark on a career in the private sector when, you know, to go into business, you know, when coming from the background that you had with two parents who were, you know, kind of fighting the good fight?
Dan Schulman
Well, I think both my parents, you know, we came from, from very little, you know, we had a, you know, a very modest upbringing. I mean, you know, as all people who live in mosest suffering is you never think of it that way. It's just the way that it is. Um, but I always knew I was going to go to work, it was the only way to support yourself. There's no family money to rely on. And so going into the private sector, was just always assumed that and it was something that I did to support myself and support, actually members of the family as well.
Alan Fleischmann
Where did you go to school on the way?
Dan Schulman
So I went to Middlebury College. It was a interesting path to get there, I was not the best student in high school. I played a lot of sports. I was very interested in that not as interested in academics. And that showed, so I got rejected from pretty much every single college that I applied to. And finally, Middlebury took some degree of pity on me or saw something and accepted me for their February semester. So late term. I drove a truck in that interim period to get by, and really learned what it was like to, to do just manual labor, to drive a truck, unload TV sets at warehouses, load them onto the truck and deliver them to other places. So I really appreciate it, getting into a school. And then I went to New York University at night, because I had to work again to afford to live and I thought it was important to get my graduate degree and I did that at night.
Alan Fleischmann
And that was you MBA.
Dan Schulman
That was my MBA from New York University. Yes.
Alan Fleischmann
Did you learn languages at Middlebury? I always think of Middlebury as being also this great, you know, platform for international languages, too.
Dan Schulman
Yeah, I tried to polish up on my use of English. Did not learn much. I did my best just to get by.
Alan Fleischmann
I understand. Prior to PayPal, your resume is a bit of a who's who of blue chip names and Telecom. I mean, and certainly in business American Express, which I think of values driven leadership there to Sprint, Nextel, Virgin Mobile, and AT&T. Was there a moment when you realized that this industry and you and you know that it was ripe for disruption, and that there was something out there, you know, that kind of your leadership role, you could take on? Or is it really kind of a journey, that kind of gave you parts of experiences that led to that?
Dan Schulman
Well, I think every part of my career helped me to understand a little bit more about myself and what role I could play and the values that I would have, I would say, one of the most influential and devastating at the same time, things that happened to me is, while I was at AT&T, my younger sister died of an aneurysm. And it really reoriented my view about life and, you know, the importance of things greater than just yourself. It forced me to really become less oriented around me and more oriented around other things. And, you know, ironically, that's really when my career started to take off when I started to focus less on my accomplishments and more on the accomplishments of others that were either on my team or I was helping to support and I learned a lot from that. You know, I wish she never died. I wish she was still here. I wish I was still more me focused and she was around, but she taught me huge lessons through her death and I'll never forget Always be grateful to her for causing me to really think deeply about what it means to be alive and what it means to give. And so, you know, my career kind of moved on from there, I moved from one thing to another. As you mentioned, I went from running divisions at fortune 50 companies, you know, with 40,000 people reporting to me and, you know, multi 10s of billions of dollars of revenue and, and P&L responsibility to Ross startups, like Priceline.com, or Virgin Mobile that literally, were raw startups, moving forward. So I've been able to see both large companies and startups and the differences between them and the differences you can make and what the purpose of a company is, and how important employees are. And all of those things have taught lessons to me along the way, and help to form who I am as a leader today.
Alan Fleischmann
I should mention as you opened just now, which I don't think I've ever really shared with you. One of the catalysts that my wife, Dafna, and I, that brought us together was the fact that Dafna grew up in Princeton, and was friends with your sister, and had holidays with your family. So we knew of them. And that my cousin was best friends with your sister, and then Daphna and my cousin didn't know each other. And the first moment early in our relationship that I introduced them to each other, your sister came up in conversation, and to me, and to us, it seemed like this omen of good. And it really, it really transformed our relationship to thinking that was something greater than just the fact that we just met each other recently. So I just wanted to share that with you and, and the values that your sister actually a 20, I believe, had already, you know, made part of her life, the urgency of time, which when people think of you, I had this conversation with a friend of yours the other day about you, with Hans Vestberg, who's the CEO of Horizon. And if I pick another CEO out there, that kind of reminds me a little of you, you know, not just because of your informality. But, you know, your urgency that you both apply to your work every day, he described you as restless with a purpose, I think was the word that he used with me that you know that you know, that you, you it kinda goes with what you said a little bit about what transformed you when you were at AT&T is the sense of time, and you know, your purpose in life, but there's no question that you're willing to take risks around values and say, this is what, you know, what we have to stand for. That is not just about profit, and that there's definitely maybe that's your startup analogy, you were just suggesting, you know, this idea that, you know, we know this type of you went through this kind of Richard Branson kind of experience, you know, that we need to move quickly and seize the moment. It was that urgency. So I guess that's part of the entrepreneur. I mean, I think a PayPal is constantly be kind of rebirthing itself a little bit.
Dan Schulman
I think, you know, in life, and as you probably also are aware, I'm practitioner of martial arts. And in martial arts, they always say that you can never stand still, that standing still is just asking to be hit. And so you always have to be reinventing yourself, reinventing your companies. You can't grow complacent, ever. Because the minute that happens is the minute you start to fall behind. And and so I think, though this idea of standing for more than just, you know, making money from a business perspective, looking at this more broadly, from a from multiple perspectives of stakeholders that a CEO serves and needs to think about—and to me, you know, when I started at Virgin Mobile, Richard and I would intellectualize this idea of businesses being a force for good, but it wasn't until I actually experienced firsthand what it meant to, at that time, support homeless youth by living out in the streets myself—only for a limited amount of time. I don't want make it sound any more heroic than that it was and it wasn't. You know, it's 24 hours living on the streets, it's not anything compared to what homeless people experienced, but begging for money and understanding how invisible you can be. Your sense of worth. I found that experiencing things firsthand was crucial to really understanding them, that it's this combination of understanding it intellectually, and understanding it emotionally, with your heart. Those two things together, are incredibly powerful. Each of them are powerful in and of themselves, but you put them together. And that is, that is where, you know, miracles can occur. And tremendous insight can occur and conviction, can can occur. And those are kind of some of the things that, you know, I learned in my in, you know, at Virgin Mobile, I applied the same things that American Express, we can talk about that, and I certainly have applied them at PayPal, in terms of what do we stand for, as a company? What are our values? And do those really drive us in terms of who we are and what we stand for?
Alan Fleischmann
That all shows about how you make a culture, I mean, you obviously then create a culture of vulnerability, it's okay to be vulnerable, it's okay to take risks, it's okay to be, you know, just to lead with your heart. You know, as I was saying a little bit that—describing you as someone who leads with your head and your heart, creative ideas, but never leaving behind the idea that it's about doing good for others as well. You know, the culture part must matter. Like, you came from great cultures, your culture is very different, I would argue, because I think of your culture—I do think of Richard Branson as being someone who is eternally young. And age cannot, you cannot stick an age to him. Right. And that is his culture, you just, you just know that tomorrow, he'll come up with another idea. I think that about you, too, you're much younger than he is. But I think of you as somebody who creates a culture where throwing spaghetti against the wall is not only appreciated, it's expected. And I guess you can only do that if you're vulnerable. And I don't want to lose the story, by the way, that you just brought up about being homeless for 24 hours, that must have been a—that there's got to be something behind that that made you decide you want to do that. So I want to go back to that as well.
Dan Schulman
Yeah.
Alan Fleischmann
That vulnerablitiy part, obviously, they're connected here.
Dan Schulman
Yeah, listen, I think, you know, people always talk about in Silicon Valley, innovation and pushing forward. But innovation has two sides to that sword. You know, one obviously is the is the cutting edge of it, which is the new products, the new services, the new ways of thinking about things that can hyper-serve customers in ways they never expected before. But if you're going to do that, you have to fail along the way. I mean, there is no way that you can be an innovative company without trying a lot of things that is the other side of innovation. So if you don't allow people to experiment, to to truly innovate, which means that there's a lot of failures along the way. And there are also a lot of very big successes that happen. But you just don't like—life isn't up into the right. Innovation isn't up and to the right. There are ups and downs along the way. And I think this idea of vulnerability is an interesting one, especially as I think about it in terms of martial arts, it really is—to be able to be somewhat vulnerable is to have a quiet self confidence about yourself. Those who don't have that quiet self confidence, cannot afford to show any kind of vulnerability at all. And look, I think it is very important for leaders to be strong leaders. To have strong sets of values. To have strong conviction around the mission and the vision, not to be, you know, go back and forth on those things not to live those values, even if living those values, which I hope we talked about later, are actually not just an intellectual thing, but a courageous thing to go and do. And so some people mistake vulnerability for weakness. I actually think about it as the only people who can actually tolerate failure, which is necessary to move forward to reinvent yourself, are those who are really quietly humble and strong and have a lot of conviction. I think Satya Nadella at Microsoft is a good example of a leader like that as well.
Alan Fleischmann
Well, you both are—if I were to describe you and Satya, I would describe you both as confident. I love the way you described—And that's the tough part about being a CEO and a leader is you have to have conviction, you have to make decisions. And there may be very many options and many choices but ultimately, you have to pick one, you know that, but it's also about the fact that you both are humble. The humility word you just used. I could never in a million years describe you in any way as arrogant, and it's very common when you talk about somebody who's confident, is that they're not one who listens, and they're not one who really wants to show gratitude to those around you. If I describe you, I would describe you as someone who's confident, very, but you are—and that humility is real. But you're not—you're not arrogant. I see you as somebody who's constantly soliciting people for their counsel, and you compliment them when they win. And you take responsibility when there's a risk and a loss, I guess. But, you know, you don't compliment them, I guess for the loss but that's, I guess, the lonely part about being a leader. But you know, that idea of gratitude, I guess, is a big part of that. How do you keep the arrogance, from never creeping behind you? Master that Satya too I guess.
Dan Schulman
I think, Alan, if you do martial arts for a long enough period of time, what you really find is, the more you learn, the more you spar and fight, the more you realize that you know, nothing. You have so much more to learn, and that anybody in that ring can hit you and and there's always somebody who's more skilled than you are. And that is just a—it's a philosophy of life, it's something you can be very Zen about that you just need to continually learn that you don't, that you will never know it all that you need to learn and keep an open mind. You know, one of my favorite sayings is that we're born with two ears, and one mouth, and we should use them proportionately. And I think that's a sign of strength. Listening is a sign of strength, knowing that you're learning all the time is a sign of strength. And some people don't put those together, but I think they go hand in hand.
Alan Fleischmann
Tell me a little bit. Tell us a little bit about the martial arts. When did you start? And then how often is that—how incorporated is that in your life now? Because it essentially—I use chess as my analogy. There's something physical, though, obviously, about martial arts, which I can visualize better than chess. You know, and then obviously, there's so many practices you have to have around martial arts mentally, as well as physically.
Dan Schulman
Yeah. Well, I went to Israel early on as a as a young kid. And they always do a form of youth military training there to get you ready for the army. So they start you off at a very early age in terms of learning about this martial arts called Krav Maga, which is translated into eye contact combat. And so I've been doing a form of that for a long time. I've been very serious about it for many, many, many years. I practice it almost every single day. I have a trainer out here in California, I think he's one of the best in the world. He keeps me very humble. He is such a good fighter and such a good philosopher, in terms of what it means, like the overriding philosophy of Krav Maga, as brutal a martial art as it is, is the best way to win a fight is to not get into a fight. And so we practice a lot of forms of de escalation and, and negotiation. Because anytime you get into a fight, you know, as Mike Tyson said, you know, everyone has a plan until they get punched in the face. And so I think this, this Zen of martial arts is something that I carry with me, you know, once you are sparring early in the morning, and you go to the office, honestly, it all seems pretty tame. And you know, I was born with a temperament that doesn't seem to get too rattled, too easily. And I think martial arts is—has honed that to a large degree. And it's a large part of who I am.
Alan Fleischmann
It's also obviously about discipline. And it speaks volumes to how you—I love that imagery of, you know, the goal is not to get into a fight, if you can help it. But if you get into a fight, then have the discipline and— You end it early. Yeah, to end it early and the where and the wherewithal to do it. My daughter's early in that in taking martial arts. By the way, same exact as you. I wanted both Daughters of mine to learn self defense. And when they came back my older one, from her first lesson, she said, it's not about self defense, Daddy, it's not self defense, you're actually getting it wrong. And she explained a little bit of what you just explained. That's right. Preventative as much as anything else. You know, I'd love to, you know, you mentioned values, I really want to get into that with you a bit because it's been going on for years, you've been very consistent. You know, I talk a lot and write a lot and think a lot about CEO statesmanship and we talk a lot about this on the show. And I've used you as an example of someone because it used to be that there was those in Washington or those at the state capitol, and they got involved in policy issues or community issues or, you know, kind of laid out what would be our priorities, kind of from top down. There's been a void of leadership around around communities and country and certainly, even at the Washington or other levels of politics and, you know, in public policy and you didn't shy you haven't shied when there's an issue of right or wrong, you know, I think about, you know, the bathroom bill and the, and the cancellation, you know, to expand in North Carolina. I think about, you know, just where you were on the values before, it was really now it's, you know, the idea of gay marriage and LGBT rights have become very quickly, I hope, you know, part of our you know, what we all think about it as a part of our society. But when it wasn't, and still isn't, obviously, it's a fight that continues, but when it wasn't so strong, and it was very fragile and very controversial. You spoke up, and you spoke out. And this is one of many, many issues when it comes to creating a diverse and inclusive workforce or diverse, inclusive society, where there hasn't been a lot of people from private industry in particular, but even life. You've actually stepped up. And I gotta imagine that you're not taking a poll. You know, you're not, you know, you're not going out there and say, What am I shareholders think? Or what are my analysts that are out there? Because I'm a public company think? Or what even when my employees think, or maybe you do know, but you do know that it's important, or you feel that it's very important, I guess you'd say. That's the values, I guess, when they think about you as someone who has courage. So tell us a little bit about some of those moments, because I gotta imagine when you did them, no one else was doing them. It wasn't so easy.
Dan Schulman
Yeah. Well, that's a question that is mult facets to it. And so let me try and address a couple of them, then maybe you can dive into it. Look, I as I've gotten older, I've realized that the mission and the vision of a company and the values associated with that are truly what differentiates a company and makes it successful going forward. I've always been a very operationally oriented, I love numbers. I love action. I love making a plan come together. You ask anybody at PayPal and they'll go like, nobody knows the numbers better than than Dan does. I always thought I really should be a chief operating officer more than a CEO and—but as I've become a CEO, this idea of a mission of a company and values that support it are so important. And the reason for that on is really actually simple when you think about it is that—what is the single biggest competitive advantage of any company and it's clearly their employees. It is do they have the best talented, the most passionate employees, and employees have choices of where they want to come. The best of choices. And they will go to companies in which they feel like their efforts are actually making a positive difference in the world. And then what they really expect from leadership. And shareholders know what your mission and your vision is and what your values are, it's not that you have to talk to everybody. You have to be very clear, and very articulate about what you stand for as a company. And then when you stand for it, people go: Oh, yeah, that's what he was talking about. The bathroom bill is a good example. Like, our mission as a company, as you said, is to democratize financial services. That's a fancy way of saying that managing and moving money should be a right for all citizens, it just shouldn't be a privilege for the affluent. And that a very inclusive kind of mission. And if you have an inclusive mission, then diversity and inclusion need to be at the very top of your values as a company. And so we talked about that. And then you know, like, North Carolina comes around where we've been looking for an operation center, for quite some time. We're running out of room, we finally decide that we're going to move into North Carolina, we have a big celebration, public celebration, big in the press, with the governor of North Carolina, announcing this, and then literally two weeks later, they announced, you know, House Bill Two, which you know, has been known as the bathroom bill, but in my reading of it, and I read it backwards and forwards, I really read through it, it wasn't really a bathroom bill. But it basically allowed for, in my view, the potential discrimination against somebody for their sexual orientation or sexual identity. And to me, that was anathema to the values of PayPal, and it just seemed like we could not move forward with that and stay true to the values of our company, because if values are just something that are plastered up on a wall, but you don't actually put them into action, then they're not values are just propaganda, and propaganda is dangerous. Values are very strong and very important. And I always say like, these aren't political values. These are like human values, like, you know, the bathroom bill, many people thought of it as a politicized issue. You know, I didn't think it was a red issue or a blue issue. I thought, like, it's a red, white and blue issue. It's the values of our country, we do not, you know, want discrimination against anybody. That's part of like, what our country was formed around. And so, you know, taking that action did lead to a lot of death threats, personal death threats. As a result of that, you know, I had to have, you know, armed, you know, security around me for quite some time as a result of that. But, you know, when I told when my mom heard about that, and I told her about it, and she said, Are you sure that was the right thing to go do given the threats? I said, Look, I learned from you, like, I would do that 100 times out of 100 times. And it was a defining moment, for PayPal, because our employees, and we have, you know, 25,000 employees, not everybody believes exactly the same thing. But they all know what our company stands for. And they all—it was a very proud moment for the for the company. And a lot of things came as a result of that.
Alan Fleischmann
You know, the consistency of your journey. I mean, the, same guy who's who sleeps on the, you know, the, you know, the streets for 24 hours to, you know, to really understand that kind of, you know, to really have genuine empathy. You know, you can only have trust if there's consistency. I can imagine, though, Dan, during that period of the bathroom bill that many people could have argued you could do a courageous thing and stop advancing in North Carolina, but do it quietly. You know, you could just say quietly, okay, you know, we can't do this, but no one needs to know and slowly creep out of the state. You didn't do that. You made it very public. Which I think is true courage. I mean, I'm sure there, there are many lawyers and other people who probably would have argued internally. And, you know, let's do this. Okay. And you're saying we can't stop your game, but can we do it quieter? And you chose not?
Dan Schulman
Well, here's what happened on that. I, we had a couple of other companies, we had signed a petition, you know, against the bill, other companies had done that. And I was watching on my, on my desktop, the governor, say, you know, we've seen a couple of petitions, but, you know, nobody's really doing anything real here, we're gonna be fine. And I was like, no, that does not work for me. And I went down the hallway to a mutual friend of ours, Franz Pasha, who, you know, runs all of our Corporate affairs and said, Look, Franz, you know, I want to plan to be out of North Carolina, in a week. And, yeah, Franz also canceled, you know, let's think this through, and I said, you know, we can think it through, but that's my decision. So let's stay like, I'll call the governor to let him know, because if they repeal HB 2, I'll rethink it. And there are a number of other things to get done. But I'll tell you, it's interesting. When you make decisions, you know, the ramifications of them, you know, it was lonely for a while. But then other companies started to do pull out—the NBA pulled out the NCAA pulled out, and I knew we were in good shape, when like my hometown hero, Bruce Springsteen cancel his concert tours there that, you know, that we had started a movement. And when I met, you know, former Attorney General Holder, at a conference, many years later, he said, your actions are what really woke the Department of Justice to really take a look at this across the country. And so one action can lead to many different things. And you know, and we took that and made sure that, you know, we paid fairly, you know, we've been 100% pay equity, across gender, across ethnicity in the US, because that's who we are. And I, you know, I always feel like, every CEO, should be able to address this issue of pay disparity between genders or ethnicity, this is something you can fix in weeks, not years. And so it's those kinds of things that I think are so important to the success of PayPal, because we've been able to attract a employee base, and we do a ton of things with our employees, they are my number one stakeholder by far and away. And they're the ones who take care of our customers. And when we take care of our customers, we obviously take care of our shareholders and our shareholders have seen good appreciation as a result of that.
Alan Fleischmann
And I want to spotlight a second there, what you said also, that ripple effect, you know, the great Eli Wiesel quote is, you know, the opposite of love is not hate, but it's a difference. And you chose not to be indifferent. I guess if you had made the decision to pull out of North Carolina, and do the quietly, it would have been actioned, but it would have been quiet so much that it would have been slightly indifferent because nobody would have known. But you went out there and I know I remember Arnie Sorenson, the CEO of Marriott who commented on your leadership, because I remember Mary, I'd came out also in North Carolina and said no deal. But it was that ripple effect. I mean, this idea that, you know, Dan Schulman did it, doesn't mean that he wouldn't have done it. But he I think he felt that it was, you know, the power by number that was created in that sequence, but it took—you were lonely when he did it. But several did follow. It became not only a national story, it became an international story. And it does speak to this idea of CEO statesmanship and what you're just—what you're talking about just a minute ago also about the inequality when it comes to economic inequality, as well as social inequality. Here we are in the COVID—you know, this pandemic, and it's exposed so much about—well maybe it's already been, you know it, you've been fighting for it for a long time, but it's exposed a lot, especially by people of color, certainly around the micro entrepreneur who may have one business, one restaurant, one salon, you know, so much of our culture, I think we came into this pandemic talking about unskilled workers. We're deeply in this pandemic right now, too. Talking about essential workers. I think if you as somebody who's respected, the, you know, people who are entrepreneurial people who are building, you know, startups, people who are, you know, overcoming enormous adversity, I kind of think that's the DNA of PayPal, which is probably why you got the workforce you do. But I'm curious now, let's go into a little bit about those values, because the values that you that you speak to, that you hold up high, let's go over them a little bit. Let's talk about what—which one of those have driven you to do some of the pretty extraordinary things you've been doing during the pandemic, also, which is also create a ripple effect for others to follow. Yeah, I keep giving you very loaded questions. I'm sorry, but they're really packed. But I want to make sure we've talked about.
Dan Schulman
Yeah, yeah, they're, they're big questions, I can have long answers. And I'm cognizant of that. So I'll try.
Alan Fleischmann
Oh, they're good answers. Thank you,
Dan Schulman
That they're not too long. Look, I think the most important value, as I mentioned before, is the concept of inclusion, and being a truly diverse organization with a diversity of thought, a diversity of representation inside the company. And that's because we tried to be there for all citizens. And to your point, Alan, there was a crisis before the crisis. I mean, you had almost 70% of adults in the United States, who struggled to make ends meet at the end of the month. I mean, that's an unbelievable story. I mean, as so many ramifications, not just around our economy, but around our political system around our democracy around our people satisfied or feel that the system is serving them or not. And then what do they do if they don't feel that way? I think financial health is the foundation of a, of a solid democracy of a working democracy. And so one of the things that that came from that, and we really have been thinking a lot about what services and products we put out to help those who are in vulnerable communities, underserved communities. But what often you don't think about when you're thinking about your customers is that actually your own employees, there are a lot of them who are struggling to make ends meet. And you never think about that, because you always think, well, we're PayPal, we pay at or above market rates, for salaries, for bonuses. And we did a survey of our employees. And I initially did it because I thought the results were going to be really great. And we were going to talk about them at an all-employee meeting. And actually, the results turned out to be pretty eye opening, where of our entry level and hourly employees, almost two thirds of them were having problems making ends meet at the end of the month. And what that really told me is that in many places in the world, really the whole concept of capitalism of let the market, you know, work, actually was falling apart. Because if if we're paying at or above market rates, and our employees are struggling to make ends meet, then the market is not working for them. And so we really, we decided that if we were going to live up to our values as a company, we actually had to do some very, very significant and costly things to assure our employees financial health. We lowered the cost of health benefits and benefits in general, for hourly workers and entry level workers by 58%, which was a huge deal.
Alan Fleischmann
Extraordinary number.
Dan Schulman
We raised salaries where we needed to. We increase the benefits. We made every employee in PayPal, a shareholder of PayPal, so they could share in our success going forward. And we wrapped all of that in a financial education program, because it's like the first time many of them have ever had equity in that kind of thing. And so this idea of taking care of your employees, which I think all of us as CEOs, and as leaders of companies, I think we need to really think about—we really, we went about this not like what is the living wage, but really, how much net disposable income do you have after all of your essential expenses are are met and we felt like you needed to have at least 20% net disposable income to be able to save for the future. And so that's what we targeted and that You know, we've looked at that location by location by location, because that matters a lot when you're looking at MDI or net disposable income. And so those are the types of things where our values have intersected with this idea of multi stakeholder views and have enabled us, I think, to make a real difference in the way that we think about capitalism, the way that we think about stakeholders, and the order in which we place our values.
Alan Fleischmann
I love that the employees were first on your list. You know, one would imagine that your investors would be the number one your list of shareholders because you're, you know, a public company, but no your employees are and the way you describe how you need your employees. And the way you just went through this whole process of vulnerability again, we you discovered, and you did something about it. Your employees are your army to fulfill the needs of your customers.
Dan Schulman
Of course.
Alan Fleischmann
And you're giving them the confidence to know that they're secure, and that they're appreciated and respected. That is—That makes sense when you say it, but it's not where you would logically jumped to before you said.
Dan Schulman
Well, that's—I'll give you one different example of that. A lot of people focus on revenues as the most important thing, and that should be like the objective of a company. But what drives revenues? Really, what drives revenues is how many customers do you have? Do they churn or not? And how much do they spend with you, which is a measure of their satisfaction with you, those are the things you should be measuring, because revenue is just an output of those variables. shareholder value is an output of how well our customers served. And the people who serve customers are your employees. And that's why like, if you, ironically, if you want to maximize shareholder value, in my view, you need to put your employees first. And that's what enables you to best serve your customers and best maximize the value of—for shareholders over the medium to long term, which is what you're trying to do. You're trying to build a company that can move from being good to great. At being an enduring financially strong, iconic company. The only way you do that is by having financially secure, passionate employees. That is foundational.
Alan Fleischmann
And you've done it—a two way street. I mean, you've done the—you're putting your money where your mouth is. This investment—that 58% number blows my mind and that, that you actually saw it, you identified it, and then you said let's invest. I'm sure that has like you the way you describe what you are, and what you did the ripple effect of being out there kind of lonely, sometimes, but other CEOs to jump in, I imagine that it sets a culture of respected, it's trust. You know, I think PayPal today, you know, very differently than I thought of PayPal just a few years ago. And I bet you if you really talk to people right now during the pandemic, which so much is dependent on e-commerce, and so much is dependent on, you know, the small businesses kind of having a lifeline to us. I mean, we couldn't have done this without technology or e-commerce as a few years ago, not even two years ago, three years ago. I trust PayPal. So I feel like when I'm buying things, and I'm—just me personally, or when I'm just, you know, trying to navigate, kind of what do we need right now, as we're all kind of sheltering in place? You know, I know I'm okay. If I do it with PayPal.
Dan Schulman
I think that is like fundamental to our brand. It like—the number one attribute of our brand that's most important is trust, and security. And those are things that come about by having the right people.
Alan Fleischmann
Yeah, I imagine, actually, it's advancing at a much faster pace right now while people are more, you become a little more a lot more indispensable to every minute of our lives. We don't—the alternative, you know, of being out there and just being out there in life has been translated differently by us being sheltered at home. So I imagine you're going to see even more trust there but you couldn't have built that overnight. So the fact that you were there before means that we can trust you today and depend on you now and I think a lot of years of work that gets into that but I don't—I want—I want us for the next couple of minutes and then we're going to wrap up now but I don't want to lose this thought also about the way you rethink capitalism because that same urgency that we started this conversation, the same way that you look at life since you're at AT&T and when you dealt with personal adversity, it's made you an unusual character in the landscape of capitalism. And that you seem to be as young as you are, on a crusade of time. And you're not letting capitalism be complacent. I'd love to have you just those—get to those values. But you know, you advocate for the rethinking of capitalism, I know that the VRT has come out with their things and your're there at places where people are convening and talking about it. But you don't really like to talk a lot. You really are the guy out there who's saying, let's just do it. What would you like capitalism to be? And then, if you can interpret it for us a little bit to the pandemic, what would you like us to what should it look like? Not what will it look like, but what should it look like?
Dan Schulman
Yep. Well, look, I think capitalism needs a, an upgrade. And but I'm a big fan of capitalism. I mean, I want people to understand, like there's a, there's a difference between, like, sometimes when you care deeply about something, it's when you point out, like, its shortcomings in certain areas. And I believe that capitalism and democracy, these things go hand in hand, because if you think about democracy, democracy is about the American dream, it's about being able to strive to reach your dreams and your visions, that your kids will have a better life than you do. This is the first generation that doesn't think that they'll have a better life than their parents. You know, this is, you know, a generation that feels like the system is letting them down. You know, my favorite quote of democracy is "Democracy needs to be more than two wolves and one sheep voting on what to have for dinner." Right? So think about that. So what that basically says is for democracy to flourish, you need to rise above your own self interest, you need to think about the whole and not yourself individually. And that's the era of statesmanship, when you can go and do that. And I think the foundation for that is for somebody to have a modicum of financial health, so that they actually can put money away, they can dream about what might be going forward, and they don't think the system is letting them down. But that actually the system is supporting them. And that's why I think it's so important that the private sector and the public sector come together. And that the private sector, the CEOs of the private sector, stand up, stand up and stand for more than just making money, they understand that all of us have responsibilities to these, these multi stakeholders. And if all of us first looked at our employees, and we have resources we have, you know, the wherewithal and the ability to make fast decisions to eliminate pay discrepancies, to increase salaries or net disposable income. And these are things that actually do pay off, honestly, I think by doing it, and no one else doing it, I'm gaining huge competitive advantage for PayPal. It's not why I'm doing it, but it's happening, if nobody else does it. And so I think that we need to think about what our moral imperatives are, and what is good for our country over the medium and long term. And that is clearly taking care of our employees, taking care of our citizens so that they have a degree of financial health, of financial wellness, because everything builds on that. Capitalism works better, if that's happening, and our democracy clearly works better if people are able to think about the issues, not about how am I going to get by at the end of the month. And so I think, you know, I don't want to talk for anybody else on that. But I think that I have a responsibility as the leader of PayPal, to be thinking about those things and to be acting on those things. And I think it makes us a company that is one that is inspiring for its employees, but does good things in the world. And if we can do all of that and be successful at the same time that's a model that that I like.
Alan Fleischmann
You know, I love that. And I love the idea that you're reaffirming capitalism but re-addressing the families a little bit or the opportunity to build and and look it in the lens of urgency and obligation. And we started this conversation talking about your parents and how they have spent a lifetime your father, your late father and your mother, certainly even now about respecting the dignity of work. You know, and I can see how you've taken that on in the private sector, and consistently done it over many different jobs, but certainly a CEO of PayPal in a way that actually is inspiring others to follow you. We're challenged now more than ever, during this pandemic. And again, you're looking at it as to seize the opportunity to advance rather than hunker down, like so many CEOs, unfortunately, are doing, where they're taking the moment to think short sightedly, you're actually saying,: Let's take this as a moment to engineer, re-engineer and rebuild. And I want to thank you for that. And I can speak for all the listeners here who are hearing you. What I am so thrilled about by this conversation, Dan is you also gave a lot of thought about what those values are and the tools in which we need to, to take on ourselves. There are a lot of CEOs who listen to the show. I hope they're inspired by you. I know I am. And there are a lot of future CEOs, I guess, and CEOs who are listening to this show as well, who I know will be inspired by you. But you've been listening to leadership matters on Sirius XM. I'm your host, Alan Fleischman. I've had the great pleasure of spending a good hour now with Dan Schulman, the CEO of PayPal, who is someone who has seen in action with family, I've seen you in action with your your colleagues. I've seen you out there sometimes lonely as a CEO, and I've seen you collectively at the table where you've inspired others to do something that they didn't normally want to do. So I say keep it up. This is gonna be a long journey. I'd love to have you back on here again, and just say with great gratitude how much we appreciate you spending this hour with us. Thank you so much, Alan. It's been a real pleasure for me as well. Big time. Looking forward to more Dan, thank you so much. Take care. Bye bye.
