Meeting

CEO Speaker Series With Dan Schulman

Friday, May 19, 2023
Speaker

President and Chief Executive Officer, PayPal; CFR Member

Presider

President, Council on Foreign Relations; Author, The Bill of Obligations: The Ten Habits of Good Citizens@RichardHaass

Dan Schulman discusses the future of the digital economy, the evolving role of business in society, and leadership lessons learned as president and CEO of PayPal.

The CEO Speaker Series is a unique forum for leading global CEOs to share their insights on issues at the center of commerce and foreign policy, and to discuss the changing role of business globally.

HAASS: So this the Council on Foreign Relations. In case any of you were wondering which one of us is the president of PayPal and which one of us is the president of the establishment Council on Foreign Relations, there are some subtle hints here in the appearances. (Laughter.) Welcome back, Dan.

SCHULMAN: Thank you.

HAASS: Great to have you. Dan, as you know, is closing in on a decade as president and CEO of PayPal. What you have—we’re going to have a conversation about all sorts of things, and then we’re going to open it up to our members, both in the room and in Zoom land. But great to see you again.

So let’s start at the end, if you will. You have two people up here of a certain generation who are both in transitions. You’re closing in on a decade. You’ve announced that you’re going to be leaving—is it the end of the year? The end of the calendar year. So I’ll beat you by six months. And by ten years. So I don’t see why you’re leaving so soon. But actually, I think the whole question of transition is a really interesting one. You are running one of the world’s great companies. You’ve done, by any measure I’ve seen, an extraordinary job. It’s a little bit like you’re hitting—you’re hitting .300, your team’s in the run for the pennant. What’s the thought process by which a CEO steps back when things are going so well?

SCHULMAN: Well, I think anytime you have hit a certain part in your career, as I was telling you, Richard, I think, you know, there are three kind of alternatives you face. You can die in the job, you can be fired from the job, or you can retire from the job. Those are your only three alternatives. So at some point you got to figure out, like, you probably don’t want to die in the job, right? So—

HAASS: Is that—what’s worse than that? (Laughter.)

SCHULMAN: I mean, you know, we all have a life to lead afterwards as well. It might be scary, because we’re used to work, right? That’s all we do. That’s all we’ve known. And so much of our identity is caught up in what we do. It’s kind of the first question that somebody asks you, you know, what do you do? And so, you know, you’ve got to be able to kind of take that and be able to say, all right, I’m more than what I do. I’m who I am, and how I do things, and what I want to do in the next phase of my life. And also, I think as you—as you get older, you know, you start to recognize—not to be morbid at all—but some sense of mortality as well. And, you know, I’m a young sixty-five, I think. But I’m sixty-five. And, you know, I have another chapter of my life. I certainly don’t want to retire to my front porch and, you know, pull out a rocking chair or anything. You know, there’s another chapter of my life that is very important to me that I want to move towards.

And then after a decade of running a company, like, the incremental benefit of one more year or two more years, I don’t really understand what it is, per se. You know, you’re—bringing in new blood to a company as well I think is beneficial. And there’s a time where you basically need to say, I think this is the right time for a transition. It’s very difficult. It’s very bittersweet. When you do it yourself, you surprise your board when you tell them about it. There are a lot of people that you have a very close relationship with inside the company. They’re family to you. I see some of them here. And I’m going to miss them greatly. At the same time, I have a life to lead that I’m very excited about. There’s so much that I want to do, a lot of it continuation of work that we’ve started here at PayPal. But I am—you know, I wake up every day. And I’m going to give every bit of my energy until the last day that I’m here. But I wake up every day, like, thinking to myself: Are you happy with that decision or not? And so far, every day I’ve been, like, that was the right decision.

HAASS: When you look back at the decade, what are the things—if you were doing your oral history—what are the two or three things that you’ve been associated with you said: Those made the biggest impact, that’s what I feel best about?

SCHULMAN: You know, I’m going to giving the commencement speech at the Stern Business School today. So—

HAASS: You going to wear the same thing, by the way?

SCHULMAN: Uh-huh, yeah.

HAASS: You’ll have a gown covering it.

SCHULMAN: Yeah, I’ll have a gown covering it, yeah, exactly. (Laughter.) But you’ll see my cowboy boots underneath it, for sure. Yeah, I always wear this, so it makes life easy when I wake up in the morning. And what was the question again?

HAASS: It wasn’t whether you sleep with your boots on. (Laughter.) The question was, when you look back at the last decade what are the things you feel—like, the biggest things you feel good about?

SCHULMAN: So, I mean, I feel very good about some of the what that we’ve done. You know, financially we’ve obviously tripled the company in size that I’ve been there, in pretty much every single metric. But I think it’s the kind of how we did things, and the fact that we became kind of a role model for, I think, being a responsible corporate citizen. Maybe we could talk a little bit more how difficult that is. But, you know, we really took the idea of stakeholder capitalism, thought about it deeply, deeply. You know, I feel like as the CEO, I have many constituencies that I serve. I serve our customers, obviously. I serve our shareholders. I serve our governments, because we’re quite regulated. And I serve our employees. I serve the communities we’re involved in.

And I decided that the number-one constituency that I support, number one—because, you know, you got to put things in order at some point—was our employees. And that everything I would do would be to put them first. Because my view is, if I put my employees first—and I’ll talk a little bit about why I think that’s so important—then everything follows from that. Everything follows from that. If they feel respected, if they feel like they can live a financially secure life, that they’ve got the wherewithal to save and to think about the American dream for their kids, then we’re going to serve our customers better than anybody else, we’re going to attract the best employees. And if we can serve our customers better than anybody else, then regulators will be happy. And over the at least medium term, shareholders will be happy.

And so we did a lot in response to that. We put in place a set of values that we live by. We don’t just talk about them. We live by them. And those are about being an inclusive organization. You know, my favorite quote by Justin Trudeau’s dad was, you know, diversity is a fact but inclusion is a choice that we need to make. And I feel that having an inclusive and diverse company makes us stronger to be able to compete in the market. And so we put into place a number of programs. We took positions externally that led to maybe some controversy, definitely a bunch of death threats for me personally. It’s really when I saw how divided this country could be.

But I feel really proud that we tried to be a role model for how we believe that corporations and governments can work together to create not just a stronger and more financially secure workforce, but I think really the foundations of our democracy rely on us being able to look beyond ourselves and look at a common whole. And that’s very hard to do when you are personally struggling to make ends meet every single month. And I think companies have a responsibility to be sure that their employees are not struggling to make ends meet at the end of the month, that they can think about more than themselves, that they can dream. And that as a result, you know, they’re not—they don’t think that the system is not working. They think that the system is working, and so they’re not radicalized. And I think our democracy and capitalism is stronger as a result.

And I—you know, I don’t wish to lecture any CEO about anything that we’ve done, because I think you got to walk in somebody’s shoes to appreciate the issues that they face. But I do think that leadership matters. And if you’re the CEO of a company, you have a responsibility. You have an obligation to be more than just about making money.

HAASS: So let me push you on that a little bit, because—

SCHULMAN: I knew you would. I knew you would.

HAASS: That’s my job here. But thank you for mentioning the word “obligations.” You sold ten books for me, so thank you. (Laughter.) The idea of putting your employees first. So let me suggest two areas where I’m curious your reaction. There’s got to be things that you’re doing that your employees don’t like. Some of the big tech companies, for example, were pressured by their employees not to do certain things with the U.S. government.

So what do you do then, when your employees say—a hundred or your employees or a thousand of your employees say: We don’t want us working on this program, because of its implications for homeland security or use of—this or that. Or your employees say to you, hey, Dan, that’s all well and good, but we want you to take a public stance on this issue. We want you to stand up and say this on the latest Supreme Court decision on guns, or Dobbs, or what have you. And you say—well, what do you say? Because employee satisfaction would lean you one way. You may say, though, I’ve got other constituencies, or that’s not my job. How do you balance that? How do you basically implement what you described as an employee-first approach?

SCHULMAN: Yeah. Well, first of all, if you have a set of values, you better act on them. So don’t just put them up on the wall and don’t act on them. Better to not have a set of values than to say you have a set of values and not to—not to do something tangible as a result of it. So I’m a big believer that values can’t be propaganda. They have to be something that you not just say, but you do. So if you’re not going to do it, whatever that is—and I’ll give some example to that in a second—then don’t have that as a value, because then your employees won’t expect it from you. But if you say something, you better act on it as well, because then you’re just a hypocrite, I think, in many ways.

And this is very, very difficult in today’s world that we live in. I mean, you can’t say “good morning” without somebody, you know, saying, like, you put more emphasis on good than morning. And you’re like, a mistake on my part, sorry. So, you know, when it comes to—you know, my view is forms of discrimination, you know, are not like a red issue or a blue issue. It’s a red, white, and blue issue. Like, this is a country that, you know, was founded on treating everybody with respect, treating everybody with a degree of humanity and, you know, and that’s what I believe in. And that’s the value we have as a company.

Like, when, you know, our first public act that you might say is, you know, when North Carolina passed the bathroom bill, you know, which was House Bill Two. And, you know, we read it. Franz, who’s right here, who’s often encouraged me to, you know, make sure that we take the right stance. Of course, he sits there and I get all the death threats. But that’s fine, whatever, you know. (Laughter.)

HAASS: Got to learn to delegate these things.

SCHULMAN: (Laughs.) Exactly. But so be it, Franz. You know, I’ll learn to forgive you for that. And but, you know, we read that bill. And we thought that it allowed for the potential discrimination of somebody for their sexual orientation or sexual identity. And I just thought that was wrong. And, you know, we were about to open a big office building there, hire about six hundred people. We had had a press conference with the governor of North Carolina right a couple weeks before. And, you know, I walked into Franz’s office and basically said, like, we’re not going to go forward with it. Like, we just can’t—it’s kind of anathema to the values that we just set.

And so we pulled out. I did not realize that would lead to so many very visceral death threats. I couldn’t even go into a bathroom without stalls being searched first, given the amount of vitriol that came my way. And I did not realize it would become frontpage of the New York Times, and that—you know, I’m from New Jersey. So it was very lonely for a while until Bruce Springsteen actually cancelled his concerts in North Carolina, and his agent called and said that Bruce wanted to thank you. And I was like, OK, this was good. (Laughter.) But then the NBA did the same—you know, the NCAA did the same thing. And eventually, you know—and, you know, Eric Holder took notice of it, because I met with him—who was the attorney general at the time of the United States.

So companies make a difference when they take a stance. They make a difference in the social fabric and construct. You’re seeing that between Disney and Florida right now as well. And I think we obviously had some people who felt like that was the wrong decision that we had made. And I understand that. And one of the beautiful things about our country is that we have a lot of opinions in it. And I think that’s a beautiful thing. But I think, you know, when people say, you know, I’m making a values-based decision or something, you have realize that just because you’re making a values-based decision doesn’t mean that it’s the same values that somebody else may hold dear and true to themselves.

HAASS: But did any shareholders or anybody push back against you and said: Hey, you made this decision, but if we had gone ahead with the thing in North Carolina it would have been better for the company and I would have gotten a better return on investment, or whatever? Did you get that kind of criticism? If so, how did you deal with it?

SCHULMAN: Some. Not a lot. But a lot on the other side as well. A lot on the other side. You know, by doing that, as a brand that we respect and will always be loyal and true to as well. These things happen all the time. They happen all the time. Like, when you’re a massive platform like PayPal, where we have 430 million active accounts on it across the world, you know, you have all sorts of organizations that want to fundraise on it. And we have to make decisions on who do we allow to use our services? Like—

HAASS: Who’s the “we” when you say, “we have to make decisions”?

SCHULMAN: We is PayPal as a company. And then there’s a set of people inside the company, from our reputation to our risk management to legal to—we have a team of people who look at every single thing on our platform. Like, if you have—and it’s hard, because there’s code everywhere. Like, you know, if somebody sent you a Venmo for $16.88 you might go, oh, thank you. But really, that’s a massively threatening thing, because sixteen is the words of the—number of words in the white supremist anthem and eighty-eighty is HH, H is the eighth letter of the alphabet, which is heil Hitler. So that is massive, you know, they are saying something to you that is massively threatening.

And so you just need to—like, we take down sites that we think are advocating violence. And we can’t have that. Can’t have somebody saying, you know, you ought to kill this group, or that group. Or, like, it’s just not acceptable. And so when we do that, there are often ramifications of that, both from the right and the left, by the way. The left feel we’re not doing nearly enough. The right can sometimes feel we’re doing too much. And so you get it from both sides. Believe me, you get it from both sides. But then you kind of realize, OK, well, that’s probably—we’re probably in the right place.

HAASS: Just one question on that, because I’ve been thinking a lot about what—you know, under the Supreme Court’s definition of free speech, corporations are citizens. And I’ve been arguing that as a result, they ought to be doing more to promote American democracy. Some of the things I’ve talked about, I’d be curious to get your reaction, is, one, give employees time off to vote, or to work at polling stations. Two, not to contribute corporate funds to any candidate who’s an election denier, or an advocate of violence. Not to advertise on any platform that gives voice to people who would, you know, essentially undermine democracy. Give people some time off to—like universities do—leaves of absence to go work in government at whatever level. How does that sort of a code of conduct sound to you, a corporate code? Because you’re all pressed to do things on sustainability and diversity, why not a corporate code of conduct to support American democracy?

SCHULMAN: Hmm. Well, so on time to vote, we put together a coalition. It started with Levi’s and Patagonia and PayPal, to give people paid time off to vote. By the time we were done we had, what, 2,000-plus corporations that had signed up to go and do that, most of the larger ones. So we brought polling stations into our office as well, so that people could be right there to vote. We believe very, very strongly in how do we strengthen democracy?

And I think—as I mentioned, I think the foundation of democracy needs to be some modicum of financial health. I mean, if you are so worried about making ends meet at the end of every single month, you’re only thinking about yourself. Like, how can you be thinking about something bigger? And if you feel like no matter how hard I work I have no dream for my kids, I can’t—you know, the system isn’t working, as I mentioned before, I think you tend to radicalize. And I think you move to the far left or to the far right. And I think this is why employers can make such a difference in kind of upgrading capitalism and upgrading the foundation, stabilizing the foundation, of our democracy by assuring that our workers have financial health, and measuring it—and measuring it.

And so there are things like time off to vote, but I think really understanding are your workers financially stressed and what can you do about that, I think—look, if all of us did that, our economy would be stronger, our companies would be stronger, our democracy would be stronger. And I just think that we can make, as leaders of our companies and in general the corporate world, we have a responsibility. We cannot look just to government to solve all of the issues in the world. That’s not going to happen, right? (Laughs.) I mean, in many ways, you know, government faces its own set of issues. It’s paralyzed in many ways. You know, it’s so partisan right now, and it’s very difficult to get things done.

That’s not the case inside a company. If I decide that that’s what we’re going to go do, that’s what we go and do. And so there’s a lot—if you want to eliminate the pay disparity between men and women, as a leader, make that decision, measure it, and stop it. You can do it in, like, eight weeks. There should—it’s as simple as that. And so I think every one of us should go and measure these things and make the decision, are you going to address it or not? So I think we have a huge responsibility and civic duty.

HAASS: I want to put another set of issues on the table, since we’re in the Council on Foreign Relations. Talk a little bit about PayPal’s foreign policy. You’ve had to make decisions about business in Russia, Ukraine, China, just to choose three countries. Say a little bit about the kinds of issues that you’re grappling with, what kinds of things do you have to take into account in your operations, in these three very different situations, and maybe where you’ve come out.

SCHULMAN: Mmm hmm. Well, we operate in two hundred countries and territories, under sixty-seven different regulatory frameworks around the world. Because we are, you know, a payments platform that does almost six billion transactions a quarter, and last year we did something like $1.4 trillion over the platform. We’re a big part of the economies of a lot of these countries. We also need to work with government officials around the world. I mean, that’s a huge part of my job, is meeting with presidents of central banks, regulators, prime ministers constantly, all the time. And a lot of the decisions are very nuanced. They’re quite nuanced.

We were one of the first big financial services companies to pull out of Russia when they invaded Ukraine. And we had a lot of conversations about it as well, because we were one of the first. It wasn’t just, like, de facto everyone had done that. We felt in the arc of history, pulling out of Russia was absolutely the right thing to do. But you have to understand, within Russia there are a lot of people who used PayPal services, a lot of people. There were artists who use it, you know, to get paid. They are not part of the government. They’re part of the population who depend on us to be paid.

And it was—I really wanted to do a couple things. I wanted to send a very strong signal of support to Ukraine, and that we really were vehemently opposed to the invasion of Ukraine. And I wanted to send a signal on that. But at the same time, I wanted to be sure that we did not shut down the service, so all funds of artists and customers could be distributed to them. We had to think about our employees inside Moscow. We met with the central bank of Russia to tell them that we were pulling out. I got a lot of very heartfelt notes from customers inside Russia asking us not to go and do that. So we had a lot of consumers, as opposed to commercial entities. But we opted and decided that that was absolutely the right thing to do, before it was mandated that that was what you had to go do.

We also felt like in Ukraine that we needed to step up immediately to help the people of Ukraine. There’s a ton of refugees that are going on. We enabled P2P services, person-to-person services, so that people outside of Ukraine could send money to citizens in Ukraine. We’ve enabled over $700 million of funds to get to individual Ukrainians since we did that. We did something in, like, fourteen days that typically would have taken us a year to go and do. We worked directly with Zelensky and his government, central bank in Ukraine, to kind of circumvent a lot of regulations to get that in place. We raised, through our platform, over $600 million for Ukrainian charities that were supporting refugees and other issues inside of Ukraine. So we’ve done maybe $1.2, $1.3 billion of support over our platform for Ukraine.

So there’s a lot that a platform like a PayPal can do to help with foreign relations. But in general, my view is that our platform should just enable commerce between small businesses and consumers around the world. And the more interaction that occurs, like, we’re not going to get involved in, like—you know, like, our typical transaction over PayPal is $60. We’re not selling, you know, airplane engines or, you know, security issues that go on. I mean, there are tons of security issues that we could talk about. But we are trying to bring the world maybe a little more together through the interconnection of global commerce.

HAASS: Does that mean that with China the kind of stuff you’re doing is almost below the threshold of—

SCHULMAN: It’s way below the threshold, yeah.

HAASS: Of what would be, say, technologically or any way sensitive.

SCHULMAN: Yeah. Yeah, yeah. I mean, it’s basically enabling consumers outside of China to buy from Chinese merchants, and Chinese consumers in China to buy from merchants outside. Buy clothes and that kind of thing, fashion.

HAASS: One or two more questions. What is your relationship with crypto? To what extent is that a factor in PayPal’s universe?

SCHULMAN: Yeah. I think most people really misunderstand crypto, or don’t understand it well, because it’s very nuanced. And there are, like, four separate things that people conflate together that are completely separate. You know, firstly there’s, like, cryptocurrencies, like Bitcoin, and Ether, and, you know, all the silly ones that are out there as well, but not the ones that—like Dogecoin and others. Those are really not currencies. They are speculative assets that people can buy, hold, and sell. But they aren’t used for currency. They’re too volatile. They’re not stable enough to be really a currency. And very few merchants, if any, accept them. And we ought to regulate that as kind of more risky types of trading.

And then there is the underlying technology, the blockchain technology, distributed ledger technology, DLT. I actually think DLT is extraordinarily interesting. I think the rails of our financial system are quite antiquated, and we need to upgrade them one way or another. Like, it should never take seventy-two hours to be able to access your funds or have multiple intermediaries between a transaction that raises the cost of that transaction to well beyond what it could be. If you put into place a stablecoin or a CBDC or something, based on some form of new technology, you could create systems that are about one one-thousandth the cost of today, and instantaneous.

And for those who—probably not many of you in this room—but for those of you who don’t have the right cash flow to pay your bills, to take seventy-two hours or a week to clear your money is a disaster. And for it to cost you, you know, eight hundred basis points, you know, for that transaction, the poorer you are the more expensive it is for a transaction, is completely backwards, in my view—completely backwards. And, you know, we want to create a more inclusive financial system. And the system today is tilted towards, you know, those who have more money. And so I think, you know, these forms of technology can—and I think when you talk to central bankers around the world, and the Fed and others here in the U.S., people agree that there needs to be an upgrading of the—of the system.

How that happens—does it happen through stablecoins, you know, which are privately issued? Does it happen through CBDCs, which are central bank-issued digital currencies. There are all sorts of forms of that. This is all going to happen. Like, people are experimenting with it anyway. Eighty percent of the central banks are experimenting with some form of CBDC right now. So what underlying technology they use is different. You know, we’re finally moving towards FedNow here in the U.S., which is instantaneous. Europe’s had more of that. But do not put in place some bad actors who have done, you know, things that make no sense anyway on trading risky assets with the real benefits of what DLT technology and stablecoin—real stablecoins, and CBDCs can do to create a more fair, equitable, inclusive, faster, and less-expensive financial system.

HAASS: Last question from me, then we’ll open it up. What’s your policy about where employees—how many employees do you have, and what’s your policy about where they work, and why?

SCHULMAN: (Laughs.) Yeah. (Laughter.)

HAASS: Not Franz, I mean other people.

SCHULMAN: Yeah, I know. Franz is always in the office. I love him about that. (Laughter.) So you know, we went from having, like, eight-five offices across the world to having, like, forty thousand, you know, when the pandemic hit. Like everybody, right, because now everybody’s home was their office. And all the security elements of that. And people got quite used to that. And, by the way, for the first, like, year and a half, our productivity went up, it skyrocketed. Because we’re, you know, basically a software company. And so we can measure pretty much everything. And, you know, people had nothing to do, and they were working, like, crazy hours and just—you know, and we could see the amount of software we were creating, and the releases go up quite substantially.

And everybody knew each other when they first kind of left, and so there was a lot of relationships. And here you are, like, three years later. And people don’t know each other anymore, right? We hire a lot of people every single year. There’s attrition every year. And now all of a sudden, those cultural ties are less than they were when we first came in. And so I initially was quite laissez-faire about it, because I was seeing all the right elements of it. And I am now beginning to feel like there needs to be—and, you know, we’re basically putting into place, like, a couple of anchor days per week that people really should be back to the office. Because I feel like it is better for our employees and better that we have more interaction together, personal interaction together.

When I’m in the office with my team and we have a meeting, you know, I can look at every single one of their faces, and I can see how they’re reacting, and I can bring them into the conversation. It’s way harder when there are ten people on a, you know, Teams or Zoom call. It’s impossible when there’s more than that. And, like, right after the meeting, we—like, four of us will sit down and go, well, what did you think about that? Like, what do you think? And then I can go into somebody’s office and talk to them. And it’s just—there’s a different interaction when you are together.

I don’t think you need to be together—I’m not dogmatic about it. I don’t think you need to be together five days a week. I see no real benefit to that. But I do see benefit to being in the office together. And I do see benefit from people learning and mentoring each other, and seeing each other, and the side conversations that occur. And so, you know, I think that’s—I think it’s very important.

HAASS: We’re on the same page there.

OK, let’s invite members here. Remember it’s on the record. Let’s start with a question from those of you who were good enough to get up on this beautiful morning. Mr. Willkie, sir.

Q: Yeah, hi. Wendell Willkie, NYU Law School.

What are the implications of the recent advances in artificial intelligence for your business?

SCHULMAN: Well, I think most people here probably are pretty well-informed of generative AI and, I think, the quite rapid advances towards more general forms of AI. And I think the implications are really profound. And I don’t want to downplay them. And I may be more on the scale of it being more profound than not. But if you look at technology in general, you look at the cost of compute, it’s gone down massively, you know, with Moore’s Law the cost of storage has gone down, what, 1,000 percent. The cost of transport, you know, has gone down. Things like the cost of software development have stayed stubbornly high. And I think AI is going to be a Gutenberg moment for software. I think the cost of software development is going to go down at that same level of—that you’ve seen these other technologies go.

Well, what does that mean? I mean, it means that, you know, we’ve been talking about STEM forever inside—like, it’s going to be automated. Much of it is going to be automated. Like, I can now tell somebody that I want them to create a website that does X, Y, and Z. Here’s my general description of it. Here’s kind of how I want it to look. And AI will create the software for that. I mean, it will give me the working links and everything else. We’re doing pilots with it right now to do quality checks inside the system, you know, that we used to do manually.

So I think every functional area of every company will be massively impacted. I think the legal profession is going to be, like, completely redefined by it. I think the whole hourly model is, like, is going out the window. Because, like, most of it—like, the analysis and the research, it’s going to be done automatically. It’s going to be done instantaneously. Charge me by the hour, it’s super, because now I’m going to be doing, like, five second increments to go do things that charged before. So I think marketing will be fundamentally redone.

And I think—you know, people always say new technology comes along and, you know, some jobs are eliminated and others are created. And I think that will be true, to some extent. But I think the amount of impact on more white-collar, you know, jobs is much more than people think. Like, these algorithms can be slanted towards repetition, kind of, you know—you know, or creativity, believe it or not. And they’re being slanted more towards creativity right now, which is kind of a little bit scary, because that’s more of the general side of it.

But I think it’s going to be very, very difficult to control it, because there are a lot of competing interests here. You’ve got corporations who are competing against each other, and you have governments that are competing against each other to be best and first in forms of artificial intelligence. You have it now out in open source. I think it is a massive threat to disinformation dissemination. It is very, very, very hard to tell the difference between you and my artificial creation of you. It’s hard to tell that difference. And so I think we really are at a moment we’re going to look back in in five years and think about all the things we might have done right now that we didn’t do.

And I think, you know, governments are realizing this, but it’s very hard for governments to move fast enough in terms of—you know, it was different when we did atomic energy. That was all government—you know, within the government that was doing that. This is not right now. And you really almost need agencies focused on AI, and the expertise in that. And you can’t be in the middle of an election that’s going to happen, you know, have to wait until 2025 to do this, when every three months, you know, the system is learning so fast that you can’t even recognize what it was three months ago. And so I think there’s profound implications on jobs that we need to really think through.

You know, I was working with some AI models and some augmented reality at the same time. I’m not a mechanic. Like, that’s—I’ve never been really good with any mechanical things. But I’m a perfect mechanic with augmented reality and an AI program guiding me on how to do things like that. I’m perfect at it. And so all kind of education—the things you’re thinking about—are going to change quite a bit. We should not underestimate the implications of generative AI or, I think, how rapidly we’re going to move more towards—maybe it won’t be general artificial intelligence.

Maybe it will be—but it will be almost indistinguishable to tell, anyway. And if you’re, like, waiting to say, like, how do the models work? It’s, like, people don’t know how the models work. They don’t know how the models work, because the models are evolving so quickly. So that’s not going to happen either. And I think that’s just like, OK, given the realities on the ground, what should we be doing? What should we be thinking about? And I think those are profound in their implications. And, again, I may be on this part of the scale on it, but I’m somewhat attuned to things that are happening around this, and I think there’s a lot that we can be excited about. These are going to change medical breakthroughs. They’re going to change our ability to solve climate issues. We’re going to have free compute that’s going to go on, because we’ll solve the energy issue around it. But it will open up another set of issues around us as well.

HAASS: So one from Zoom land, Laura.

SCHULMAN: Zoom land.

OPERATOR: We’ll take our next question from Sarah Williamson.

Q: Hi, Dan. It’s Sarah Williamson from FCLTGlobal.

I wanted to come back to your point on stakeholder capitalism and the importance of employees to your organization. And you’ve publicly bought a lot of your own stock, of PayPal stock, even as you prepare to step down, which has gotten some press. Do you think there’s a broader opportunity for employees to have more stock to try to close to gap that we often see between the sort of investor versus employee mindset, that I know you’ve been—you’ve been trying to resolve.

SCHULMAN: Yeah. Again, I’ll tell you what we’ve done, but it’s not necessarily the answer that everyone should do. You know, when it came to sort of employee financial health, you know, I thought there were a couple things. One, obviously, what are we paying them, right? But everyone looks at, like, minimum wage. I think minimum wage is a really difficult—like, $17 an hour may be great in, you know, parts of the U.S., and it’s not enough in other parts of the U.S. And it’s different for Indonesia than it would be somewhere else. So we put in place a measurement. We called it net disposable income. How much money does somebody have left over after they pay all of their taxes and their necessary living expenses?

And we worked with academia, we worked with some other people. And for somebody to feel financially healthy, they need to have 20 percent NDI. So 20 percent of their net disposable income needs to be available to them after they’ve paid their time. We inside PayPal, and we pay at market or above market rates everywhere, 50 percent or so of our population had an NDI of 4 to 6 percent—4 to 6 percent. And, again, we pay—we pay—like, the market doesn’t—really what it told me is, like, the market isn’t working for everybody.

So we raised rates, salaries, where we thought it was appropriate. We also lowered the cost of health care benefits by about 65 percent, because that’s a huge part of the issue. And people were making tradeoffs between putting food on the table and getting health care benefits, and that’s ridiculous. And then we gave everybody—we gave everybody inside PayPal restricted stock, so that everybody could feel like an owner of the company. And, you know, sometimes it works great when your stock is going up. Sometimes it works—you know, people are worried when the stock’s going down. But that’s OK, because they should be worried when the stock’s going down, they should work extra hard when that’s happening as well.

But I really wanted everyone to feel like they were owners. That if you’re a customer service representative, that call you’re on with matters. It matters. Every single interaction we have with a customer matters. So, like, you want to serve customers better, do more things that delight them. And I feel like people need to be owners to feel that way. It doesn’t need to be a lot, but it needs to be something that people feel like they’re an owner. So, Sarah, I think doing that in some way is important. It can be a one-time thing, it could be an ongoing thing. People need to think about it.

But I feel like employees feeling like they’re owners of the company, being able to buy-in, you know, with whatever different programs you might have, you know. I thought, you know, my buying stock in the open market was the right thing to go do as well. But I think everyone needs to make their own decisions. Our decision was we want our employees not to be financially stressed, because when they are financially stressed they leave the company, attrition is higher, training costs are higher, our Net Promoter Score is the highest it’s been in five years now, since we put this in. And, you know, my view is if customers are happier, then eventually that all translates into more revenues and happier shareholders as well. So I do think everything is tied together. But I think the mismatch sometimes is in the timing of the expectation of the benefit of it.

HAASS: Just want to reassure the employees here from the Council that we’re looking into shares, restricted units, maybe options. I want you all to be co-owners of the Council.

Q: Hi. Thanks so much for being here. I’m Nili Gilbert, the vice chair of Carbon Direct. I also sit in the leadership of a number of financial institution net zero alliances.

So congratulations on the net zero by 2040 commitment that you’ve made at PayPal. Another thing that really stands out in your commitment is the way that you talk again about the social values that you’ve expressed here—community engagement, economic inclusion, protecting the vulnerable. I was wondering if you could tell us a little bit about your strategic thinking on that. I’m sure a lot of CEOs feel overwhelmed looking at the range of ambition that they hold in terms of their values and leadership for their companies.

SCHULMAN: Yeah, it’s a great question. I think for no particularly good reason ESG has gotten sort of this bad rap. But I think ESG is, like, OK, protect the environment, have good governance, and then the S is the social part of it. I think environmentally, like, it’s easy to measure those kinds of—now, there’s—you know, there are different ways that are harder as we get into more defined elements of it.

But we all—we all live on this planet. There’s only one planet. It’s in bad shape. And we need to do our part, all of us, to try to make sure that we aren’t—you know, we all don’t have water to drink and we don’t bake, you know, in ridiculous heat waves, and everything else. And the most vulnerable live in the places of the world that are most impacted by climate change as well. And so there’s a lot for all of us to do on that. And I don’t think any of us should ignore it. And we can measure it, and we should do that. And good governance inside a company is just—I mean, it’s—jacks are better in the poker game, right? You have to have great governance, and you should be able to measure that as well.

The S is more difficult. The S is something that we’ve spent a lot of time talking about in different conferences. Like, how do you measure social impact? And what role does a company have in creating social impact? You know, my view is we have a role of making sure that we take care of our employees, because we control that completely, as I mentioned before. Equal pay across ethnicity and gender, we control that completely. Like, what does our diversity look like inside our company? We control that completely. And what’s the financial health of our employees? Like, let’s do our part to go and create that.

And then be a voice with others in trying to have other CEOs think about that as well. Because I think the S is massively important for our democracy. It’s massively important. And it’s massively important for our economic system as well. People need to have the wherewithal to save. They need to have the wherewithal to dream. They need to have the wherewithal to hope that their kids have a better life than they do and, like, be all in to the system. And when they are, I think, like, this country, and capitalism, and democracy can flourish. And I know that that’s not going to happen next quarter. You know, I get it, right? Just because we’re measured on a quarter doesn’t mean that big, macro issues are measured on a quarter. They are measured in years and decades sometimes, and longer.

But it’s like planting a tree. Like, you may not be around to see that tree grow, but you should plant trees because that’s for the next generation, to be sure that they’re strong and can enjoy the same things we did. So I think I had a responsibility while I was steward of PayPal to make sure that we were planting trees along the way. And if you ask me, like, what am I most proud of—you know, besides, obviously, all the scaling of PayPal, those things that are a given to being a good CEO—it is what we stood for and how we did it as well.

HAASS: Laura, we have time for one last short question, and Mr. Schulman will be succinct.

SCHULMAN: Yes. Yes, I will be. (Laughter.)

OPERATOR: We’ll take our next question from Ann Clark.

Q: Hi, there, Mr. Shulman. Ann Clark, executive vice president of social impact and sustainability at Edelman.

I think a good question to end on. You’ve spoken a lot about responsible business under your leadership, and PayPal has undoubtably made a tremendous impact. Partnerships have been an important tenet of how you’ve achieved that. What’s your approach to partnership and are there types of partnerships that are more critical than others?

SCHULMAN: Yeah, that’s a great question. I don’t think any one company, no matter who that company is—and there are some real strong companies in the world—can do—can do it alone. Like, part of the beauty of open platforms and, you know, software, and the ability to connect into other platforms through APIs and other sets that nobody needs to really worry about, but just be able to bring respective assets together to better serve customers, is essential. It really challenges, like, the business model. Like, what is a win-win between two companies coming together, and who’s, like, controlling the customer relationship or not? But really thinking about this as sort of what is the right win-win in a partnership has been crucial to PayPal’s success, whether it be working with other financial services companies or tech companies around the world.

I also think private-public partnerships are essential. We spend a tremendous amount of time with the regulators. And we spend a tremendous amount of time with government officials to try and figure out what do we support, how do we work together, where can our voices join forces together, what can we do around training, what can we do around a lot of foreign policy issues as well. And so I think these partnerships are really important, but I think the difficult thing about them is figuring out win-win. And it’s figuring out how you compete and partner at the same time. And those are sometimes very difficult things to go and do.

HAASS: So last, what are you going to do next? So come December 31, New Year’s Eve, you’re a free guy. January 1st, you watch a game or two, sleep off the hangover. What is it—as of January 2, what do you do?

SCHULMAN: (Laughs.) You know, I’m trying to keep that to myself right now.

HAASS: Oh, this is—we can make this part off the record.

SCHULMAN: It’s just—I know, it’s an intimate—with everybody on Zoom. You know, there are a lot of things that I want to go do, whether it be working inside government, working with nonprofits, spending time with people I love who I haven’t seen for a long, long time, or not enough, that’s for sure. There’s no shortage of things to go to do. But I’m really trying to not say yes to anything till I—until I have more time to think about it.

HAASS: You know what they say about sixty-five? It’s the new sixty-five.

SCHULMAN: (Laughs.) I feel that way. (Laughter.)

HAASS: Dan, thanks for being back with us today. And thanks for all you’ve done. And Godspeed as you go forward, my friend.

SCHULMAN: Thank you. You too. (Applause.)

(END)

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