Since Dan Schulman became President and CEO of PayPal in September 2014, the online payments company and its leader have delivered a performance for the ages. Since PayPal went public in July 2015, revenues have nearly tripled as transaction volumes climbed fourfold, which has in turn delivered significant long-term value creation to stockholders. Looking back, Schulman has no doubt that trust-building has been at the heart of PayPal’s success. In this interview with Rik Kirkland, former managing editor of Fortune, Schulman reflects on what it takes for businesses to earn trust — and why doing so is going to matter more than ever. (PayPal is an Edelman client.)
Rik Kirkland: Trust is declining across so many countries and institutions these days. How can organizations move that needle in the right direction?
Dan Schulman: First, understand that trust can only be built over time. A company can’t just look up and say, “Hey, we want to be trusted.” Today, PayPal regularly shows up at the top of various lists of the world’s most trusted brands. But a lot of what we did to support that goes back six or seven years. You have to think longer term than the next few quarters.
Second, be consistent. For a brand, that requires a clear mission that sets out what you’re about; a clear set of values to support that mission; and articulating both clearly, internally and publicly. Above all — this is incredibly important — it requires acting on those values. Saying that you have values and not acting on them is worse than not having any values. That’s what causes employees to revolt, that’s how you sow distrust with customers or regulators. My dad told me, “You are what you do, not what you say.” Make sure what you say and what you do are always aligned.
RK: Does earning trust for a business today require more than simply offering reliability and products that deliver good value?
DS: Trust extends well beyond whether you deliver an excellent product or service. Doing that is very necessary, but it’s not sufficient. To be a company that embodies trust, your mission and values should make it clear that you stand for more than just maximizing profit. That you stand up for social issues that are important, and you do the right things to help create a better world. I really believe companies can’t think of themselves as separate and distinct from the communities they operate in.
RK: For example . . .
DS: Some is about the things you do. We’ve taken a lot of positive stands: backing immigration reform; providing access to interest-free loans to help federal workers when they were furloughed during the government shutdown in 2019; and investing more than $500 million since 2020 to close the racial wealth gap by supporting Black-owned small businesses and creating an economic opportunity fund to invest in community banks and credit unions serving underrepresented communities.
Some is about things you stop doing. For example, we’ve barred hate groups, the Proud Boys on the far right and Antifa on the far left, from using our platform. The difficult part there is identifying what is hatred and what is freedom of speech. Nobody teaches you that.
To be a company that embodies trust, your mission and values should make it clear that you stand for more than just maximizing profit.
But the older I’ve gotten and the longer I’ve been in CEO jobs, the more I’ve realized that if mission and values are what guide your toughest decisions, it’s not actually that hard. When North Carolina passed a bathroom law in 2016 that discriminated against LGBTQ citizens, I immediately made the decision that we were going to withdraw our plans to open an operations center there in a week. Because that was a clear assault against people for their gender identity and their sexual orientation. Now, I didn’t realize how much it was going to thrust us into the national spotlight, that I couldn’t go into a bathroom for a while without security searching the stalls first. But it was clear to me that this was a case of putting our values into action, and honestly, we had no choice but to make that decision.
RK: How can trust serve as a guide to managing the conflicting demands of diverse stakeholders?
DS: That companies operate in a world of stakeholder capitalism has to me always been a full no-brainer. It’s also clear that while I serve at least five different constituencies — employees, customers, communities, shareholders, regulators — my number one constituency is my employees. And I’ll say that in front of any shareholder
The reason is, if I can attract and retain great employees, a passionate, diverse workforce who believe in what we are doing, then nobody will work harder or execute better against PayPal’s mission. And that is going to give me all the competitive advantage that I need.
That said, all stakeholders matter. A lot of tech companies aren’t trusted because people don’t understand how they work. At PayPal we launch no product or service without regulatory consultation. When I first came here, we had about 100 compliance and financial crimes related staff. Today we have more than 4,000. You might say, “Wow, that must stop you from innovating .” But I consider it a competitive advantage. Because when we launch a new product with the backing of regulators, consumers can trust it as well.
RK: Does a more digital world put a higher premium on trust?
DS: Digitization is making us all more vulnerable to people we don’t really know. People know their information is “out there,” regardless of whether it’s packaged or sold on the dark web. The world is ever more prone to cyberattacks. As a result, people are feeling very vulnerable. They are looking for safety, rocks in a shifting landscape that they can count on.
What they really care about is: Is a brand secure and does it protect my privacy? For PayPal, security and privacy are the two pillars we rest on. Transparency is also critical. Products should be simple to use and easy to understand. No surprises, no fine print. Your business model shouldn’t rely on people not having all the facts, or pricing that’s not clear.
RK: Trust in autonomous systems and distrust in fiat currencies are part of the explosive rise of crypto and blockchain technologies. How do you see those forces playing out?
DS: People misunderstand or conflate various parts of the complex debate over crypto, digital currencies and blockchain. Yes, there is a set of people who believe some form of cryptocurrency should be out of the hands of government and disintermediate everybody. But I strongly believe there is no way that the world’s financial system is not going to be regulated by governments. That system’s stability and integrity is just too important. Yes, a lot of people get hung up on the price of Bitcoin and whether it’s in a bubble. I think we should have the humility and courage to admit that we’re in the early stages, and we don’t know perfectly what the future is going to hold.
But none of that means we shouldn’t explore the opportunity now to innovate responsibly. The core of PayPal’s mission is to make sure people aren’t left behind or left out when it comes to the financial system. The current system is antiquated, inefficient, expensive, and exclusive. Those are facts. And pretty much every regulator and central banker agrees. If I had to predict, I think what’s going to happen with crypto is that it will become an enhanced utility for payments. That involves things like the ability to create programmable money, which uses software and new technology to take payments to a different level. You can embed compliance in a payment, you can embed identity. This all goes well beyond what we can do today. You can digitize assets by creating non-fungible tokens or take pieces of asset classes that could never be available to the masses and decompose them in ways that make them more affordable.
What all these ideas do is use the underlying distributed ledger technology to make the system more efficient and, where it makes sense, disintermediate unnecessary intermediaries. If I’m sending an international remittance from one digital wallet to another digital wallet, why go through four or five different middlemen who tack on 8% or more in fees when I can do that transaction at a miniscule cost and do it instantaneously? The key will be to experiment and explore the potential innovations in crypto and blockchain hand in hand with regulators, so they continue to trust us as well.
RK: Looking ahead, will trust stay at the top of the corporate agenda?
DS: The typical financial metrics that people look at, such as revenues and profitability, are products of other drivers. For example, revenue is really driven by our ability to grow engagement, minimize churn, and continue to scale. But behind all those quantifiable drivers are deeper things: Are you putting out products that are safe, secure, and easy to use? What is your brand trust rating?
To me, trust is the primary driver. Because there’s been such an erosion of trust around the world, I believe it’s going to continue to be a huge potential differentiator. To get this right, leaders need to operate over the medium-to long-term and think in a multi-constituent fashion. Without doing that, you can still be a good company. But you will never be a great, enduring, or iconic company. Because building a great company relies, above all, on trust — trust earned consistently over many years.