PayPal Still Growing

Posted by Mark Brousseau

An interesting article from the Austin American-Statesman about PayPal's plans:

PayPal doubles Austin office space

Many of the online payment company's 200 people here develop software.

By Kirk Ladendorf
AMERICAN-STATESMAN STAFF
Friday, August 15, 2008

In a little over a year in Central Texas, PayPal has grown to 200 people, most of them software developers, at its new Northwest Austin technology center.

Now, the online payments company has doubled its office space in Austin and plans to keep hiring aggressively.

Chief executive Scott Thompson offered explanations for the expansion: His company is growing fast, it needs more technical workers and it likes what it sees in Austin.

"PayPal is a technology and risk-management company more than anything else," Thompson said. "Our product development is done by engineers. They are all technology people who have a lot of talent, skills and capabilities in doing things with software."

The company is entrusting some of its most important work — software for new payment products, fraud detection and help-desk assistance —to the Austin technical team.

"It was a big decision, but we are extremely happy with what the result has been in a very short period of time," Thompson said. "We have been able to get tremendous quality and many more people than we thought. When we tell people we have openings and we are PayPal, lots and lots of people turn up. We get to pick from the best of the best because our brand in this market has a lot to it."

PayPal, which is owned by eBay, is the leading alternative payments company for e-commerce and other online payment transactions. Much of the company's transaction business is tied to eBay, but it is also expanding into other areas of e-commerce and electronic payment.

Thirty-three of the top 100 e-commerce sites in the United States use PayPal as a payment option. It is growing rapidly in Europe, and it is just starting its growth in Asia and Latin America, where e-commerce is in its infancy.

"They are the largest alternative payment company," said analyst Bruce Cundiff, with Javelin Strategy and Research in Pleasanton, Calif., who estimates that PayPal handles roughly 5 percent of e-commerce payments now but probably will double its market share to 10 percent over the next four to five years. "They are growing with e-commerce. We have them growing faster than credit card or debit card payments, but they are starting from a smaller base."

The company, with more than 60 million active customer accounts worldwide, handled $47 billion in transactions in 2007, and its first-quarter business this year was up 35 percent from a year ago. The company employs 7,000 people worldwide, and its major business operations centers are in San Jose, Calif.; Scottsdale, Ariz.; Omaha, Neb.; Dublin, Ireland; and Austin.

Thompson said the company is giving the Austin development center more responsibility because it has done very well so far.

"So far, it has been fabulous, and that type of success breeds on itself," he said. The company subleases office space in Freescale Semiconductor's Northwest Austin campus, and it is doubling its lease space to 70,000 square feet.

Some of the most interesting work being done in Austin is tied to the company's sophisticated software that detects fraudulent activity.

The software examines the online behavior of customers using PayPal and shuts down transactions involving those that exhibit fraudulent behavior patterns. The company said its loss rate to fraud is 0.27 percent, which it said is among the best in the payments industry.

PayPal's software developers work hard, Thompson said, but they get a chance to relax on the job, too.

The company break room has a pool table and a foosball table. And workers on motorized carts deliver free beverages to workers' cubicles. Sometimes the cart drivers conduct impromptu races in the halls.

The culture, Thompson said, is about moving fast and having fun doing it.

"The best part of our culture is, we have a furious desire to go fast and build stuff and have customers use products that are uniquely PayPal and very special in their lives," Thompson said.

Although other companies also do electronic payments, Thompson said, his company does it very quickly, safely and conveniently.

kladendorf@statesman.com; 445-3622