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PayPal CEO Dan Schulman is one of the most passionate proponents of stakeholder capitalism that I know, and is unabashed in his advocacy.
“I’m a big fan of capitalism, but like everything else, it needs an upgrade,” Schulman told Ellen McGirt and me in the latest episode of Leadership Next. “This idea of just counting on market forces to create a just and equitable society isn’t working.” He gave the following example from his own experience:
“I saw that firsthand within PayPal. We pay at or above market rates in every place in the world where we hire. We did a study and we looked at net disposable income, how much money they had after taxes and essential living expenses. For call center workers, entry level workers, which is a large percentage of our workforce, their net disposable income was below 10%. We feel like 20% is the bare minimum you need to have savings, to not struggle, and to make ends meet at the end of the month…You can’t have passionate employees if every month they are worried about how they are going to make ends meet.”
The result: he gave pay increases to PayPal workers, even though the market didn’t require it.
Schulman argues his actions on pay have worked just fine for shareholders. “The people who argue profit and purpose are two different things, I think, don’t understand that they don’t really work against each other.” And for now, at least, PayPal’s performance has justified his approach. “We just had a record quarter across almost every important metric in our business” thanks to the rise in digitization, he says. The company’s stock price is up 75% since the first of the year.
You can hear the whole interview with Schulman here. More news below.
Yesterday's big selloff in the U.S. (S&P 500 down 2.8%, Nasdaq down 4.1%, blame tech stocks again) continued into Asian markets today, with the Nikkei falling 1% and the Shanghai Composite down 1.9%. But things picked up when European markets opened; the Stoxx 600 was up 0.5% at the time of writing, with U.S. futures rising slightly too. Wall Street Journal
AstraZeneca and the University of Oxford's trials of a potential coronavirus vaccine are on hold, as the scientists evaluate why one participant came down with an unexplained illness. AstraZeneca says this is merely standard procedure, but investors took fright and the company's share price dropped 6%. Fortune
South Korea's Samsung and SK Hynix are reportedly set to bow to U.S. pressure and stop supplying Huawei with their chips. The suspension of trade will apparently kick in next week. New U.S. sanctions introduced last month forbid non-American firms from selling Huawei components that are made using American technology, unless they get U.S. approval to do so. The Verge
Apple strikes back
Apple has filed counter claims against Epic Games for lost App Store fees and other damages, following the Fortnite maker's suit against Apple over its App Store conditions (30% commission on in-app payments, plus required use of Apple's payment system.) Epic instituted its own payment feature in the popular game, leading Apple to pull it from the App Store. Reuters
AROUND THE WATER COOLER
Google has backed out of plans to lease a 202,000-square-foot piece of office space in Dublin. The office would have had enough space for 2,000 workers. Google has not said why it pulled out, but insists that it will "continue to invest" in its Irish operations—handy, as its European headquarters are in Dublin. CNBC
The U.K.'s health secretary has laid into Britons for getting coronavirus tests when they aren't displaying symptoms. "About 25% of people who are coming forward don't have symptoms and aren't eligible," Matt Hancock complained, as those trying to book tests via the government's online portal remain greeted with the message that the "system is unavailable." Sky News
New York Magazine's Intelligencer has an interesting interview with American Compass founder and former Mitt Romney adviser Oren Cass, who sets out his vision of organized labor done the conservative way. He argues for the widespread rollout of works councils, and for a form of collective bargaining—and potentially striking—that takes place at a sectoral level, rather than being a matter for a particular firm and its employees. Intelligencer
The forced sale of TikTok's U.S. operations is the opposite of being "tough" on China, according to the U.S. Naval College's Rebecca Lissner, who writes for Fortune: "If democracies make shortsighted decisions and retreat to their own digital shores, they will leave China with more room to control information how it pleases and help other repressive states to do the same. By closing off the U.S. to China, Washington is actually making it easier for China to write the global rules governing 21st-century technologies." Fortune
This edition of CEO Daily was edited by David Meyer.