Help Wanted: Formerly fast-growing fintech seeks enterprising exec to slim down and shape up a large, bloated corporation. Must be able to weather comparisons to long-serving and beloved retiring predecessor. Experience with layoffs a plus. Any takers?
On Feb. 9, the same day it reported its fourth quarter results, PayPal announced CEO Dan Schulman would retire at the end of 2023, in December. PayPal’s new CEO has some big shoes to fill. Under CEO Schulman, a 65-year-old former American Express executive who joined the company in 2014 (just before it spun off from eBay), PayPal’s revenue nearly tripled to $27.5 billion in 2022 while its market cap growth has outpaced the S&P 500. Total payment volume during Schulman’s tenure grew fivefold from $288 billion in 2015 to $1.36 trillion in 2022.
The good times continued into 2020, but as the pandemic began to wane in 2021 so did PayPal’s results; net income was nearly flat in 2021 compared to the year before, while revenue grew just 18%. But in 2022, PayPal’s results slowed even more. Revenue rose 8.4% while profit plunged nearly 42%. Though other fintechs have also seen their fortunes reverse, PayPal is trading at just 10 times enterprise value to EBITDA, versus 23 times for Block (the company formerly known as Square), and 34 for Adyen. “[PayPal] was growing really fast and now they’re not. A lot of companies have pandemic hangovers,” said Christopher Brendler, senior research analyst at D.A. Davidson & Co. Brendler pointed to the devastating loss of eBay as one big blow—the former parent company switched to Adyen as its primary payments processor in mid-2020.
Dan Dolev, a senior analyst in fintech equity research at Mizuho Securities USA, thinks PayPal needs a big brand name to fight the perception that they are a “melting ice cube.” PayPal is “definitely not killing it in terms of their performance,” he added. Investors have come to him worried that PayPal might choose someone internally, Dolev said. There are also concerns that PayPal will use its upcoming investor day—which has not been set but is expected in late second quarter—to introduce someone they are considering, Dolev said. “The fear is that they have someone in mind and use Investor Day as a soft introduction,” he said. Those who have closely followed PayPal may recall that their investor day was the site of a major misstep in February 2021, when then-CFO John Rainey said he expected PayPal to reach 750 million active users by 2025. The company was forced to backtrack those expectations several months later.
Given that Schulman is sticking around through December, the search is still in the early stages and PayPal’s board has yet to engage an outside search firm, Fortune has learned. But there is already plenty of chatter about who PayPal could—or should—approach. To compile our list of possible contenders, Fortune spoke to private equity executives in the payments space, CEOs of rival companies, analysts, and venture capitalists. Our list is meant to include executives that might be considered for the role—but that of course doesn’t necessarily mean that they’d take it if offered. Fortune reached out to all the individuals named for comment, but all either declined or did not respond by press time.
One early favorite is Sarah Friar, who spent nearly seven years as the CFO of Square before she left, in December 2018, to join Nextdoor, the hyperlocal social networking service for neighbors. Nextdoor went public by combining with a special purpose acquisition company, or SPAC, nearly three years later, in November 2021. Like many de-SPAC mergers, Nextdoor has performed badly in the public markets. The company has yet to trade above $10, the number SPACs typically price at, closing Thursday at $2.18 a share.
Friar also spent 11 years at Goldman Sachs where she was a senior software analyst as well as a year at Salesforce.com as the senior vice president, finance & strategy, according to her LinkedIn. “Sarah is a strong name. I’m a fan. She has the Silicon Valley credentials that matter to PayPal,” one payments executive said. D.A. Davidson fintech analyst Chris Brendler said Friar would be “fantastic” as PayPal’s CEO. Friar left Square for Nextdoor because she wanted to be CEO, he said. “She’s well regarded by the Street,” he said. One private equity executive said PayPal needs an executive who understands payments. “People love Sarah Friar so that’s possible,” the person said.
Only one executive has the know-how and the Wall Street cache to lead PayPal, Mizuho’s Dolev said. He pointed to Max Levchin, the founder and CEO of Affirm, who is also a PayPal co-founder and its former chief technology officer. (Levchin, along with Peter Thiel and Elon Musk, launched PayPal in 1998. Thiel is currently a general partner of The Founders Fund and helped launch Palantir Technologies, where he is chairman. Musk, the co-founder and CEO of Tesla, acquired Twitter for $44 billion in 2022.)
Levchin is the same caliber of executive as Jack Dorsey, the co-founder and ex-CEO of Twitter as well as co-founder, principal executive officer and chairperson of Block, but more grounded, Dolev said. “He’s like the Elon Musk of payments. But he’s obviously running Affirm. If he were not, in a hypothetical world, the market would be excited about him,” Dolev said.
Peggy Marie Alford
Still others think PayPal will look internally for its next CEO. They mentioned Peggy Marie Alford, who returned to PayPal in March 2019 and is now executive vice president, global sales. Alford spent nearly two years, from 2017 to 2019, as CFO and head of operations for The Chan Zuckerberg initiative, the philanthropic fund started by Mark Zuckerberg and his wife Priscilla. Before that, Alford held several positions at PayPal, including vice president & CFO, Americas, global credit and global products; chief operating office-Asia Pacific & global head-cross border trade; and SVP, head of human resources, people operations & global head-cross border trade.
“Peggy has the highest chance. PayPal will look for an insider that understands more the consumer side of the business,” a CEO of a fast-growing, rival payments company said.
One former PayPal insider that will likely be considered is John Rainey, who joined Walmart as executive vice president and CFO in June. However, it’s not terribly likely Rainey is on the market. The executive likes to stick at places for a while before moving on. He lasted nearly eight years at PayPal, where he was CFO and EVP, global customer operations, and five years at United Airlines where his last position was executive vice president and CFO. Rainey spent another 13 years at Continental Airlines as vice president of financial planning and analysis, according to his LinkedIn. Rainey is a “good guy, really good CFO,” a former PayPal employee said.
But it was Rainey who gave PayPal that “oops” moment when he said, in February 2021, that the company would reach 750 million active users in 2025. One year later, Rainey said those aspirations weren’t appropriate.
Visa and Mastercard have each undergone recent leadership changes but whether PayPal would pick its next leader from either company is unclear. Ryan McInerney officially took over as Visa CEO on Feb. 1, replacing Alfred Kelly Jr, who became executive chairman of the board, according to a statement. This means Oliver Jenkyn, a long-time Visa exec, may seek out another position. Jenkyn has worked at Visa for more than 14 years in various roles, including group president & president, North America. Most recently, he was named group president, global markets in February, his LinkedIn said. “He’s had quite a successful track record [at Visa],” a current Visa employee said.
Mastercard in 2020 tapped Michael Miebach, then chief product officer, to succeed Ajay Banga as CEO. (Banga left Mastercard at the end of 2021 to join private equity firm General Atlantic where he is currently vice chairman. On Thursday, President Joseph Biden nominated Banga to be the next president of the World Bank, according to a statement.) One fintech executive pointed at Linda Kirkpatrick, who is Mastercard’s president, North America, as a potential successor for whenever Miebach might step down. The thing is, Miebach has done well during his two years at the helm of Mastercard and could last another eight to 10 years. Kirkpatrick has spent nearly 26 years at Mastercard and is “on the fast track,” a former Mastercard executive noted. While Kirkpatrick is “waiting in the wings,” it’s unclear whether she’d consider jumping to another firm.
It would be odd for PayPal to choose its next leader from Visa or Mastercard, D.A. Davidson’s Brendler said. He thinks the company will likely pick someone with a technology background, rather than a traditional payments background. He pointed to Bill Ready, the CEO of Pinterest, and a former PayPal executive, as “an ideal candidate.”
Ready is the ex-CEO of Braintree, a payments gateway, that, along with Venmo, was sold to PayPal in 2013. He spent six years at PayPal, including more than three as EVP & chief operating officer, before jumping to Google in 2020 where his most recent title was president of commerce, payments & next billion users. Ready joined Pinterest as CEO in June 2022.
“Bill Ready is a hot name but he’s pinned at Pinterest,” Dolev, of Mizuho, said.
The mere mention of Ready as head of PayPal would likely ignite rumors of a Pinterest merger. In October 2021, Bloomberg reported that PayPal was exploring a $45 billion acquisition of the social media company, but the deal never went through. Some think a PayPal/Pinterest merger would solve issues for both companies. Pinterest has online audience but no payments while PayPal has payments but no online discovery. “These two companies are missing important components. If they get together it makes a lot of sense,” an analyst said.
Stay tuned to see who PayPal picks—and passes over.
Learn how to navigate and strengthen trust in your business with The Trust Factor, a weekly newsletter examining what leaders need to succeed. Sign up here.