EBay Names Marcus PayPal Head to Bring ‘Startup Energy’

EBay Inc. (EBAY), the largest Internet marketplace, promoted David Marcus to president of its PayPal payments business, picking the head of a recently acquired startup to run the company’s fastest-growing unit.

Marcus succeeds Scott Thompson, who became CEO of Yahoo! Inc. (YHOO) in January. He will take the role April 2, shifting from his current position as vice president for mobile, the company said in a statement today.

PayPal, which was acquired in 2002 and now accounts for more than 40 percent of sales, will benefit from the “startup energy” Marcus brings, Chief Executive Officer John Donahoe said in the statement. Marcus joined EBay in August, following EBay’s $240 million purchase of Zong Inc., a company he founded that has helped PayPal bolster technology that lets shoppers use mobile phones to make purchases.

“PayPal is not only a large business, but it’s a very fast-growing business,” Gil Luria, an analyst at Wedbush Securities Inc. in Los Angeles, said in an interview. “It needs someone that understands how to head a company that’s growing very quickly. An entrepreneur that has built a business from zero to selling the company is a very good candidate to do that.”

PayPal this month unveiled a new card-swiping device that scans checks and works with all four major credit-card networks -- an initiative led by Marcus.

PayPal Here

The reader, called PayPal Here, plugs into a smartphone and accepts payments from Visa Inc. (V), MasterCard Inc. (MA), Discover Financial Services (DFS) and American Express Co. (AXP) cards. It’s designed make it easier for small merchants such as cab drivers and food trucks to use its technology.

Picking an internal candidate was a “vote of confidence” in the PayPal management team and a message that the company is serious about continuing its focus on mobile, Luria said.

At Zong, Marcus developed technology that allowed consumers to pay for purchases from their mobile phones or computers by entering a mobile-phone number. EBay’s acquisition of the company was one of five it made in the last year, data compiled by Bloomberg show.

At PayPal, Marcus has helped lead mobile-payment volume growth, Donahoe said, which is projected to reach $7 billion in 2012, compared with $4 billion last year. The company had total payment volume of $33.4 billion in the fourth quarter.

Company’s ‘Agility’

Marcus said he “strongly” supports the company’s focus on the mobile platform and in-store payments and doesn’t foresee major changes.

“It took us about seven months to build that product inside of that company,” he said in a telephone interview.

“Every day, I’m impressed at the agility this company can have and how it rises up to the occasion again and again to build a product really quickly. I think there’s no plan to change the strategy.”

PayPal’s e-commerce payment business also started allowing shoppers to pay using physical-payment terminals in Home Depot Inc. (HD) stores across the country last month, part of an effort to win customers from credit-card companies. The in-store service helps consumers purchase items at a checkout with a PayPal card or with a phone number and pass code.

Revenue at PayPal helped EBay reach sales of $3.38 billion in the fourth quarter. Still, growth at the payments division slowed from the previous quarter, down to 28 percent from 32 percent.

“David leads with a founder’s perspective,” Donahoe said in the statement. “He is a successful technology entrepreneur with a passion for great products that engage and delight customers. David’s appointment signals our deep commitment at PayPal, and across EBay Inc., to be a leading technology-driven and customer-focused product innovation company.”

EBay fell 0.7 percent to $36.99 at the close in New York. The shares have climbed 22 percent this year.

To contact the reporter on this story: Danielle Kucera in San Francisco at dkucera6@bloomberg.net

To contact the editor responsible for this story: Cecile Daurat at cdaurat@bloomberg.net

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