PayPal CEO's Blunt Talk an Eye-Opener for Retailers

RANCHO PALOS VERDES, Calif. -- Dan Schulman, CEO of San Jose, Calif.-based PayPal, approached the podium wearing jeans and a V-neck sweater. He did not carry any notes—only a cup of coffee, which he never drank as he calmly and matter-of-factly went through his prepared remarks.

“Being a leader in this day and age is maybe more difficult than any other time,” said Schulman from the general session stage at CSP’s recent 2018 Outlook Leadership conference in Rancho Palos Verdes, Calif.

The way Schulman sees it, technological and societal changes are hitting Americans—and the world—faster than ever before, and even the most forward-looking companies are ill-equipped to handle this breakneck pace of change.

He sees true leaders as people who define reality and inspire hope. As such, he gave the audience a heavy dose of reality while attempting to inspire excitement about the fast-changing future we are approaching.

Click through for the highlights from Dan Schulman’s Outlook Leadership presentation …

Photograph by W. Scott Mitchell

Business leaders often think they are looking toward the future when they are really guessing what will happen next based on past events, Schulman said. He likened it to trying to steer a boat while not looking ahead but looking back at the wake the boat leaves behind in the water.

“Instead of looking at what could be, you extrapolate what was,” Schulman said. This backward-facing logic was one of the reasons some of America’s most successful companies have failed, he said.

He cited typewriter company Smith-Corona when one of its engineers invented the "Delete" key. The CEO of Smith-Corona at the time bragged about the innovation during an earnings call. Four years later, Smith-Corona filed for bankruptcy. “Their mindset was in a print and edit mode as opposed to edit and then print,” said Schulman.

The point: Businesses should be most wary of the future when they think they are the most secure. “It speaks a lot toward the hubris of corporate America,” said Schulman.
 

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Schulman offered an avalanche of facts and figures to illustrate how irreversibly connected our society is to modern tech. Here are just a few:

• Every day on Tinder, a popular dating app, there are 1.4 billion swipes.
• There are 81 trillion emails sent every year. About one in 96 of those carry a malicious virus.
• Facebook has the equivalent of 126 books on every Facebook user, and each book is the equivalent of about 150 pages.
• There are 22 billion messages sent back and forth over Facebook’s Messenger platform daily.
• A full 80% of the world owns a mobile phone.
• There are about 11 billion Google searches every day.
   

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The internet and technology connecting it to us are not only ubiquitous, but its users and data are also constantly under attack from bad actors. And no one is immune. Not even the U.S. Postal Service.

“The post office was attacked last year 4 billion times. It doesn’t have interesting information, but it does have back doors into government,” said Schulman. And if one of the “bad guys” eventually opens that back door, they could do terrible damage to America and its infrastructure.

“There are two types of businesses: those who have been hacked and those who do not know they’ve been hacked,” Schulman said. The average American business is targeted by a hacker about 4 million times a year, he said, while the average financial institution is attacked 3 million to 5 million times a day.

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The good news is that Schulman said 80% of these cyberattacks are from self-styled “hactivists,” hackers who break into companies’ systems simply to prove how easy it is in an attempt to encourage the company to increase security measures. “If you’re good with cyber-defense, they’re successful 1% of the time,” he said.

The bad news: Schulman claims about 13% to 14% of these attacks are from true cybercriminals who intend to find and steal personal and company data they can then sell on the dark web, a corner of the internet that is not visible to most users where cyber criminals go to buy and sell ill-gotten data.

“Those cybercriminals are outstanding at their job,” said Schulman. “If I could turn them and have them work for me, I would.”

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But even as computer security systems become more robust, technology is advancing so quickly that cybersecurity experts need to stay on their toes. They are not the only ones who need to be on high alert, Schulman said. Retailers need to be prepared for advances in technology that could completely overturn years of conventional industry wisdom.

“Autonomous cars will definitely be a reality as soon as five years in sunny, good weather locations, and maybe 10 or 15 years in locations with worse weather,” he said.

Self-driving vehicles mean more than easier travel, as Schulman tells it. To him, they mean a complete paradigm shift for a host of industries. “With autonomous cars, you will probably need one-eighth of the vehicles you have today," he said. "No need for garages or driveways. City parking goes away. Expensive real estate near trains goes away.”

And that’s not all. Schulman of course mentioned the effects on gas stations, in addition to insurance, rental cars and more.
 

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“There’s a saying in martial arts that you can never stand still,” because standing still means getting hit, Schulman said. He regularly practices Krav Maga, a fighting style developed for the Israeli Defense Force, and he had the cut on his chin to prove it.

Similarly, he advised Outlook Leadership attendees not to stand still or become comfortable with their success. “We have to, as leaders, create the culture in our companies that fosters innovation,” he said.

He admitted that the flipside of innovation is failure, and that most innovations are not successful, but he encouraged everyone to build a culture that rewards courage. Schulman shared his hope that he had given attendees something they could take back to their teams and use to inspire hope at their companies.

Next year's Outlook Leadership will be held Aug. 11-14, 2019, at the Omni Grove Park Inn, Asheville, N.C.

Photograph by W. Scott Mitchell