Schulman Brings Cowboy Boots to PayPal in Return to TechElizabeth Dexheimer
Dan Schulman is back where he started: running a technology company.
Schulman, 56, who favors cowboy boots and jeans at work, is leaving American Express Co. to become PayPal’s president and chief executive officer designee as it prepares to separate from parent EBay Inc. The move gives Schulman, who once ran Virgin Mobile USA Inc. and Priceline.com Inc., the chance to be a CEO again.
“It is a return to his roots leading digital and mobile technology companies at critical phases in their development,” AmEx CEO Kenneth I. Chenault said today in a statement. “For Dan, this represents an opportunity to serve as CEO of a publicly traded company.”
Schulman helped lead a digital transformation at American Express since joining in 2010, spearheading online and mobile efforts while focusing on customers lacking access to traditional banking. He’ll take that experience to PayPal as it vies with networks including Visa Inc. and MasterCard Inc. for a share of the expanding digital-payments market and competes with technology companies such as Apple Inc.
Schulman grew up in Princeton, New Jersey, the son of a Rutgers University associate dean and a scientist, according to a 2008 interview in the New York Times. He wasn’t immediately accepted at college because of his grades and drove a truck before attending Middlebury College in Vermont, where he played football and lacrosse, according to the article.
While at Virgin Mobile, Schulman spent a day on the streets of New York without money or a phone and only a blanket to keep him warm, according to the account he gave the Times. Unshaven and wearing dirty jeans, he said it took five hours of begging to raise a dollar and proved a “life-altering experience.”
Under Schulman’s leadership, AmEx’s growth enterprise unit developed BlueBird, a reloadable prepaid card, in a partnership with Wal-Mart Stores Inc. The product and a digital platform known as Serve were designed to expand the New York-based firm’s reach beyond affluent shoppers and attract consumers who lack access to traditional banking services.
“There is an epidemic right now of people being forced to the margins of our financial system,” Schulman said on a May 14 conference call. “We really figured out a way to create an alternative banking service, riding on a software platform accessible via your mobile phone, and basically recreating the way that you might think of banking for consumers for this century.”
American Express customers loaded more than $1.9 billion on the prepaid cards this year through April, almost triple the amount from a year earlier, Schulman said in May. AmEx added 2.4 million new customers to its Bluebird and Serve products in addition to the 7 million customers that were on the network at the end of last year, he said.
Still, some analysts say Schulman hasn’t demonstrated enough progress on the new products. AmEx doesn’t break out the profitability of its prepaid offerings, which suggests they don’t contribute meaningfully to the company’s bottom line, said Jason Arnold, a RBC Capital analyst.
“AmEx has tried to pursue a lot of different opportunities in mobile payments and tech-oriented and alternative sides of their business,” Arnold said in a phone interview. “But they haven’t caught on in a big way -- that’s why there’s not a lot of financial data.”
EBay is spinning off its PayPal division following demands by activist shareholder Carl Icahn amid rising competition. Apple, based in Cupertino, California, struck a deal with startup Stripe Inc. rather than PayPal when the iPhone-maker announced a way for people to use its latest device to pay for goods in stores.
“Dan brings a wealth of knowledge of offline commerce from AmEx and he’s got a technology background and prepaid experience,” Scott Valentin, an analyst at FBR Capital Markets, said in a phone interview. “Boosting their offline business, that’s the biggest challenge for PayPal.”
Schulman sought to broaden AmEx’s reach to younger customers and expanded the firm’s technology expertise. He hired hundreds of employees with technology backgrounds and opened an office in Silicon Valley.
Before joining AmEx, Schulman led the prepaid group at Sprint Nextel Corp. and helped found wireless firm Virgin Mobile. He was CEO of online travel company Priceline for less than a year before being replaced in 2001.
Schulman would have been a candidate for the top spot at Virgin Group Ltd. if he hadn’t left for American Express, Virgin founder Richard Branson told Bloomberg Markets magazine in 2012. The two men used to play tennis together and Schulman learned kite surfing while on a visit to the billionaire’s home on Necker Island in the Caribbean, Branson said.
Schulman will be replaced by Neal Sample at AmEx, who previously led technology development at the firm’s enterprise growth unit.