The CEO of PayPal started his career making $14,000 a year — here’s how he rose through the ranks and took 3 companies public

• Dan Schulman is the CEO of PayPal. During his tenure, he has managed the company’s spin out from eBay, and he's overseen several major acquisitions and partnerships.
• Before PayPal, Schulman led AT&T, American Express, and Priceline, and he helped to launch Virgin Mobile with Richard Branson. He’s taken three companies public. His first salary was about $14,000 a year, or a few hundred dollars in each bi-weekly paycheck.
• Schulman practices krav maga, the self-defense martial art used by Israeli soldiers. He says it's influenced his philosophy on leading, and has helped him learn to never raise his voice.

Dan Schulman has battle scars. The actual scars come from krav maga, a martial art he practices nearly every day. The others you can't see are from decades of leading companies, from the boom and bust of the dot-com bubble to the challenges of taking three companies public.

Schulman told Business Insider's US editor in chief on our podcast,"Success! How I Did It," that he has learned a lot from both krav maga and his career, and his commitment to them go hand in hand.

"I've done martial arts almost all my life, and that's informed not just fighting skills but living skills as well," Schulman said. "It's been an important part of how I think about both living in general and work, and it informs my philosophy there."

In the interview, he described his early days at AT&T (where he made only about $14,000), building Virgin Mobile with Richard Branson, the day he experienced homelessness in New York City, his advice for how to take a company public, and how he's redefining payment transactions at PayPal.

You can listen to the full interview on "Success! How I Did It" here:

Subscribe to "Success! How I Did It" on Acast or iTunes. Check out previous episodes with:

• Former Apple and Pepsi CEO John Sculley
• Angel investor Jason Calacanis
• Former Microsoft CEO and Clippers owner Steve Ballmer
• Box CEO Aaron Levie

Below is a transcript of the conversation, which has been lightly edited for clarity and length.

Alyson Shontell: You've done a lot in your career. I wanted to know more about you and how you grew up because that really shapes a career from the beginning. You're a Jersey guy, born in Newark, raised in Princeton. Tell me a little bit about your upbringing.

Dan Schulman: I am a product probably of three things. First and foremost, my parents. They were a huge influence on me and their advice and counsel to me was always be yourself. It's hard to fake it if you're yourself because you're just being authentic and I think that's really important. Second thing is, I've done martial arts almost all my life, and that's informed not just fighting skills but living skills, and it's been an important part of how I think about both living in general and work, and it informs my philosophy there. And then I say the third thing is, I learned a lot working with Richard Branson. He was a big influence on me and we talked a lot about the philosophy that business needs to be a force for good and that's informed a lot of my thinking as well as a business leader.

From earning $14,000 to managing billions

Shontell: Your career got started, it seems, at AT&T. In the early '80s you joined — and did I read that your first job was $14,000 pay?

Schulman: Yeah, yeah.

Shontell: So that was at AT&T?

Schulman: I think my weekly paycheck was something like $104, biweekly or something net. I still have it somewhere. I spent the first 18 years of my career at AT&T and it was a wonderful place that kept me moving all the time. I mean I started off as entry level a position as you can get at AT&T. I was an associate account executive, which means I was an assistant to an account executive, and account executive was just the salesperson at the time, then I became an official account executive and then a sales manager and then a product manager and eventually, through perseverance and some luck and a lot of hard work, rose to become the youngest member on the operating group.

I ran AT&T's consumer business, which at the time was a $22 billion revenue stream, $8 billion of IBEDA and 40,000 people or so and I was 39 when that happened. And then, to my parents' chagrin, because they thought that was like the best job in the world, this big office that actually had a bathroom in it and they couldn't imagine anything more that their son could do, I left to join a startup, an internet startup, which really befuddled them.

Shontell: You had a bathroom in your office? That's how you know you've made it.

Schulman: I did. Never since and never want one there again, but yes, that was a big part of being a senior officer at AT&T.

Shontell: But that's a really impressive path. I mean, it's 18 years but you start in this kind of humbling job, you have your first paycheck still that was $104 and then you become its eventual president, managing 40,000 people. What do you think are the steps that you took that were the most important to help you climb that corporate ladder?

Schulman: I do think there's no substitute for really hard work. But I think the thing that launched my career at AT&T, I had a pretty tragic thing happen in my family. My sister died and I was leading a big team at the time and I had to take time off. It was a difficult, difficult time and when I came back, I realized my team had really hung in there with me and I just realized that what we had accomplished was completely what they had accomplished. I gave them full 100% credit.

I think what I learned there is giving credit to others actually attracts more and more people to your team because they want to be a part of that team because they know that it's a team that is going to work together as one team, nobody's going to try to take credit over somebody else. In many ways, leadership is about defining reality and inspiring hope, but if you have these great people around you and they know that what they do is going to be recognized, it can be incredibly powerful.

Shontell: I want to talk about one thing else that you touched on, which was this big decision to take your cushy, safe job you've worked so hard to get at AT&T that your parents are proud of and risk it all on a startup. The startup was Priceline and you joined the year it went public, in the peak of the dot-com boom.

Schulman: Before I became the president of AT&T's consumer division, I was running strategy and our internet services, so I was the president of one of the first internet service providers, ISPs, AT&T Worldnet, and running our internet protocol product development as well. So I knew a lot about what was going on with the internet. I remember trying to explain to the AT&T board actually what the internet was and what portals were at the time and it was a far stretch for them to understand that, but I really thought that that was the future and I wanted to be a part of that. It was the wild west of the internet at the time. There were a couple of big companies that are still around now: eBay and Amazon, Yahoo was one of the big ones at the time, AOL was really just beginning.

So we were all really small community, we all knew each other at the time, and it was a boom and bust, and once it went bust, you really had to just buckle down, look very carefully at what your business model was, make sure you had the right cost structure in place and just one by one by one, assure that you had a great value proposition that really resonated. I think all of us who went through that learned a tremendous amount in terms of resiliency and really focusing on what is the value that you're really offering to a customer, how can you be a customer champion, and really what is the model and does that model make sense or not.

Shontell: And how did Priceline end up for you? I think you were fired, right? To put it bluntly. Or no?

Schulman: Yeah ... no. What happened is, we went through a transitional time there where I had to lay off a number of people, and as we went through that layoffs of a number of people, to get that business model to the place it was, there was a time where it was best to hand off to the next generation of leadership. And I had met Richard through that, and Richard had been talking to me about this new venture.

Shontell: And this is Richard Branson.

Schulman: Yeah, Richard Branson, and I thought, what a perfect time to make a transition. We got Priceline to a good place where it could take off. Richard and I had a real exciting thing to go through so it was a great time to transition.

Meeting Richard Branson

Shontell: So talk about meeting Richard, because you guys would go on to do some pretty cool stuff together.

Schulman: Yeah, well, the first time Richard and I met, I had been doing Priceline, so we had obviously started working with Virgin Airlines. When Virgin Mobile started to take off in the UK, he thought that there was the opportunity to do a similar thing in the US so we both met at his house in London and we both were trying to figure out how to dress for each other. I've always been in jeans and cowboy boots for a long, long time, and Richard's a very casual guy, as well. The second he looked at me as I walked in and he said, "Phew! I'm so glad that you're dressed in jeans," and I said, "Me too!" And then we just immediately hit it off.

Philosophically, we both have a lot of progressive, sort of social consciousness in terms of what's important in the world, and that really you have the power to make a real difference in the world, and we talked a lot about that, how to best take that responsibility and translate it so that there was no distance between being a for-profit shareholder-driven and customer-driven company, but also being a force for good and how could you marry all those things together and so we had a great ride together. We're still very good friends.

Shontell: So just a quick side question before I ask you about the Virgin Mobile days. How does a Jersey guy end up wearing cowboy boots?

Schulman: I don't know actually. I started wearing them in eighth or ninth grade.

Shontell: That's bold as a middle schooler.

Schulman: Yeah, I got a lot of hassle for it, definitely. I wanted to set a fashion trend, but it never caught on, just to be clear.

Shontell: So it sounds like you and Richard really hit it off, and you did go on to do Virgin Mobile together and you grew it really successfully to the point that it became public, eventually got acquired by Sprint. But how do you scale a company like that?

Schulman: We really started from almost nothing. I think Richard gave us $2 million and we started, about 10 of us or so. The thing we thought a lot about is, how do you take a company and embody it as a customer champion? In the wireless industry at that time, if you remember, you had to choose a certain bucket of minutes and so if you went over it, you had overage charges and if you went under it, you were paying a lot per minute and it was very difficult for you to judge your exact talk time and actually know how much talk time you were doing and the industry made its profits on that inefficiency. But it wasn't a great consumer experience and so we thought that there was a real way of coming into the market and having a very cool brand that would have no hidden fees, it was pay as you go, which was still new and typically prepaid was a very expensive proposition because it was high churn and we said, why don't we just make that into a great service with a lot of great content around it, tailored toward the youth market? And we went at it.

It was not easy. In the first couple of months, you have to raise a lot of money to buy handsets and you've got to have retailers that will accept them. You know, we had a couple of times where we were close to shutting down the business. I remember telling Richard we had to raise something like $20 million, $25 million for handsets, and I remember Richard saying, "Look, I have a hotel — my favorite hotel in the world — that I own and I'm going to sell it to buy those handsets for you." And I said, "Don't do it — I really don't want you to do that." He goes, "I believe in you and I trust you and I support you and I'm going to go do this." And you can be sure that made a huge impression on me. I'm already a hard worker, but I mean, I would just give everything that I possibly could on that and nothing pleased me more than when we eventually went public. Richard not only got all his money back but made somewhere around a quarter of a billion dollars of profit on Virgin Mobile. I was so thrilled to be able to do that for the trust that he showed in not just me but the entire team and yeah we went through ups and downs again but that's a brand that's still one of the leading prepaid brands in the US today.

How to take a company public

Shontell: And so how many road shows have you gone on? You've taken how many companies public?

Schulman: I've run really big companies as president of divisions like AT&T, American Express, and I've done raw startups like Priceline and Virgin Mobile. Both of those grew to be over a billion-dollar businesses, both of them went public, and then eventually going to PayPal and spinning that out of eBay with so many people and taking that public and going on that road show as well, so yeah quite a number of times.

Shontell: Like three?

Schulman: Yeah, three.

Shontell: And so do you have tips for that, because we had Aaron Levie on and he was, like, "I could write a book on exactly how not to go public, I did it all wrong, it was a disaster." I mean, you're a pro at this now. What's it even like?

Schulman: I think the best thing is to be very authentic and transparent in your road show. And to price yourself the right way in it because at the end of the day, the market determines what your worth is and you want to give the market the best data and information to make that decision. It should be a real transparent: "Here are the pros and cons, here's how we think we can address the cons." This is a marathon, not a sprint. They're playing for not just a short-term pop but really returns over a longer investment horizon.

Homeless for a day

 

Shontell: One interesting thing you did when you were CEO of Virgin Mobile is you spent 24 hours homeless on the streets of New York City, begging for money and food. Why did you do it and what did you learn?

Schulman: Yup. It was quite an informative and impactful thing for me, not just doing that but going forward as well. At the time, Virgin Mobile decided that the cause we were going to draw attention to was homeless youth. There is obviously a homelessness problem in the country but there's also a couple of million kids who are homeless on the street for different reasons and they don't really have a voice. They're usually pretty much preyed upon, and we thought, OK, Virgin Mobile is a youth-oriented service, we want to do something in which we can give back. But I quickly realized that if you want to talk about something, if you want to believe in something, you can't just intellectualize it, you have to experience it, because I think the power of your voice comes from your brain, obviously, but also your heart.

I went with a person who was the executive director of a homeless youth organization and we met and we basically went in jeans and a T-shirt, I hadn't shaved in a while, we could carry only a quarter to make a phone call from a pay phone if we were in trouble. We had to beg for money, for food, for coffee. It was only 24 hours, so let's not turn this into some heroic thing, but what it really did give me is an appreciation of just what people go through and how difficult life is when you don't have the things that you just take for granted. This carried over as we went into financial inclusion and some other things that I've really been a champion of. But actually living what it's like not to have a checking account, not to have a credit or a debit card, and waiting in lines and seeing how much it costs and seeing the environment around you and feeling that sort of indignity that can go on with not having the things again that affluent.

Shontell: Where did you sleep and how did you eat and what did you do for that day?

Schulman: Yeah, so it is, one, the day goes on forever because you don't have much to do and it's hot and we tried to sleep in a couple of different places but you get kicked out of them quite a bit so we climbed over a fence and slept in a skateboard park on the Lower East Side. I can only imagine what it's like for that being your life for the foreseeable future. I became a very fierce advocate for it. I went down to Congress, testified, brought in people like Jewel to come in to testify down at Congress. She was homeless for a while as well. We got the Senate to pass some resolutions on it, we gave free concerts, but people had to volunteer at homeless shelters. It was really all about raising awareness for homeless youth.

Remaking PayPal

Shontell: So you take Virgin Mobile public. It eventually gets bought by Sprint for upwards of $500 million.

Schulman: Almost a billion, yeah.

Shontell: You make Richard Branson a ton of money. He's very happy, you're very happy, that's great. And then you spent some time at AmEx as the president of Enterprise Growth and then you join PayPal and that's where your third road show starts pretty much right from the beginning, right?

Schulman: Yeah, I was brought in to do the split from eBay, and then take the company public.

Shontell: So what was that process like to take on this ginormous task of spinning PayPal out of an already public company, not upsetting the employees, not upsetting the shareholders? It's a huge task to take on. Why were you crazy enough to take the job?

Schulman: I felt, as an independent company, that PayPal could reinvent itself and really focus on taking advantage of all the great assets that it had but really starting to expand its mission and its vision. And one of the things that I learned at American Express is that there's a saying that it's expensive to be poor and that was especially true in financial services, that around the world, there are 2 billion people who are outside the traditional financial-services industry, in the US maybe 70 million or so are underserved. There's a real powerful way that technology can democratize financial services. It can make the managing and moving of money a right for all citizens and not just a privilege for the affluent.

Shontell: So how do you spin out a company like that and how do you lead your employees when they're going through so much change?

Schulman: Carefully. That was a very complicated spin-out. You had had 12 years of companies coming together, right? Trying to go into common data centers, all the language was eBay, PayPal was a subsidiary of eBay. When I came in, we announced it and really we were trying to spin out some nine or 10 months later and had to undo everything, all the functions, keep all your people excited about what could be and really think clearly about what would set up both companies for maximum success in a post-spin-out world. It was, in many ways, a lot harder than taking a private company public, it was taking apart two companies and then you had investors that were trying to figure out where they wanted to go.

Then we needed to be ready to go as our own company, come up with our vision, our own mission, re-architect our technology stack and really modernize it so that we could be an innovative company again and really be able to execute in a world where retail is fundamentally changing, consumer buying behaviors are fundamentally changing, and being able to keep up with that pace. What was amazing was to see, you throw challenge in front of people and they're inspired about it. They move mountains to get things done and it was so impressive to watch the company come together around this.

Shontell: So you all just reported earnings, I hear they were good. What's the latest? Where's PayPal at these days?

Schulman: We've had a couple of good quarters in a row so our revenues now are growing at 20% on an FX neutral basis and so we did over $3 billion of quarterly revenue, first time ever that we did that. We did $3.14 billion, that's up 20%. But most important, our net new actives, the customers that we're attracting to the platform, we brought on 6.5 million net new actives in the quarter. That was the largest number we've brought in in at least the last three years and we now have 210 million people on the platform. 17 million merchants, almost 200 million consumers. We did over $100 billion of process volume for the first time, we did $106 billion that grew to 26% year over year, so the company is reversing years of slightly declining trends and now across our core products lines, they're accelerating again.

The future of payments and cash

Shontell: And peer-to-peer is a pretty sexy topic within payments. You all own Venmo. Of those 210 million users, are a lot of those Venmo? How's the peer-to-peer space growing?

Schulman: Yeah, so peer-to-peer is exploding.

Shontell: Because you now have a lot of competition, too. There's Apple Pay and everyone wants to get into payments.

Schulman: There's a host of competitors and that's not surprising. It's $100 trillion market as best we can define it. 85% of the world's transactions are still in cash today so there's a huge opportunity to digitize all of those payments and in many ways, for PayPal, we've kind of changed our model and our philosophy and we are now partnering with the largest tech companies, we're working with most of the large financial institutions. We realized, there's no real reason to be competitors on this, we can actually be allies because it's such a huge marketplace and coming together, we can provide unique consumer experiences that none of us alone could provide.

Peer-to-peer over the next three to five years — I've seen some studies saying that it's going to grow by 10 times where it is today and we have peer to peer both on the PayPal side and on Venmo but Venmo is so much more than peer-to-peer. The reason why it's so popular in younger demographics really under 30 or so is that it's tied into all of your social feeds and your social networks and it's really a payments experience much more than just a transaction so you can see what are your friends doing, everybody tags their payments. In fact, we did $8 billion of volume on it last quarter, that's up 103% year over year, so a very popular and beloved service for the millennial generation.

Shontell: Do you have predictions on are we ever going to actually be cashless, and if so when? Will my kids have cash?

Schulman: Yeah, a lot of people have predicted the demise of cash and everyone of them has been wrong. Mobile is redefining retail and it's driving the mobile payments and rethinking of the value proposition that retailers give to their consumers using the mobile phone to get more intimate with their customers. Money itself, like checks, are going away as people do things more with digital bill pay as opposed to writing out checks. So I think you're going to see a hastening of the digitization of money going forward but I think it would be a long time before we see the end of cash.

How krav maga affects a career

Shontell: A big part of your life is you practice a martial art — krav maga.

Schulman: "Contact combat" in Hebrew, yeah.

Shontell: You just had this big article in The Wall Street Journal, documenting how you're doing this for hours a week, but sometimes hours a day.

Schulman: Almost every single day, yeah.

Shontell: So what is it and how has it affected your career?

Schulman: I believe we live our lives as a whole. People say, there's work and then there's sort of the rest of your life and I kind of try and live life seamlessly as best I possibly can. And krav maga is a part of that for me. I think what I really love about martial arts is there's a lot of philosophy around it. The biggest thing that you're taught is the best way to win a fight is not to get into a fight. And there are all sorts of ways of deescalating situations or spotting certain situations and avoiding them, and I love that philosophy because a lot of people do fight or flight mechanisms and I think what you really want to do is neither of those.

You really want to create this path in between those two things. And there's a confidence that comes with that and there's a certain philosophies that you use that are very applicable to business. One of the big ones in krav maga or in fighting is never stand still — standing still is asking to be hit. So if you're engaged in a competitive battlefield like we all are in business to some extent, even if things are going well, you can't stand still because that's just asking to be hit. You constantly need to be innovating, you constantly need to be thinking one or two steps ahead. You need to trust your intuition, not overthink things as well, and so there's a lot of just Zen that comes with martial arts.

I've never raised my voice ever in the office. Not once. If you've been sparring, which I do almost every single morning, there's really nothing in the business world that is like the equivalent to that, it all seems relatively controllable and relatively doable and you really try to see the big picture, you try and see where might you avoid conflict, where when you come into conflict, what are the best ways of deploying your resource. We often say in fighting, like, conserve your resources, every punch has to have a home so don't just flail away, make sure you have a game plan. It's the same business. But there's a lot of similarity between what we're taught in martial arts and krav maga and what we practice in business and what we practice in our lives as well.

Shontell: Well, you're certainly not standing still, having run a bunch of different companies and I've seen the scars on your arms you showed me this morning from army-crawling across the floor in practice and sparring so keep it up. But thank you so much for joining us, Dan. It's been a real pleasure.

Schulman: Thank you so much for having me. I've really enjoyed it. Thank you.

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