Fostering Innovation at PayPal

Sri: What is the Innovation Lab at PayPal?

Mike: We have Innovation Labs in Chennai, Bangalore, Scottsdale, Singapore, Shanghai, and San Jose where people can gather to learn about the future, brainstorm, talk about emerging technologies, and have “random encounters of the innovation kind”. Now that we are working remotely, I actually miss being in those physical spaces because those interactions now have to be planned, which is not quite as spontaneous. We also invite speakers to come in that attract people from across the company – not just engineers.

I’m a firm believer that great ideas can come from everywhere. Heck, my background is in accounting! When diverse thoughts and experiences come together, that’s when the magic happens.

Sri: Do you also work with people from outside PayPal?

Mike: When we started the Labs it was just internal, but that’s changed. We partner a lot with universities that want to solve creativity and innovation issues.

For example, we have close relationships with all the technical universities in Singapore. As part of that, we are bringing in Ph.D. candidates to PayPal to do problem-solving in our business units around the world. It’s a way for the students to get real-life experience and be able to apply the research they are doing to solve customer problems today, while at the same time PayPal gets exposure to deep academic expertise.

Sri: It sounds like there are so many topics you could cover in the Lab. We could be brainstorming about ecommerce, payments, technology, machine learning, artificial intelligence, blockchain, quantum computing, robotics - it could be broad. And it’s exciting that we don’t restrict the topics to PayPal’s business. The philosophy we believe in is that creativity is something that can be learned and oftentimes tinkering is a great approach to learn how original thought can come about. But it all starts with an idea. How do you manage ideas?

Mike: We do this in a number of ways. One is our Global Innovation Tournament. This is our second year of running the tournament – we give everyone in PayPal the opportunity to anyone to solve problems our senior leaders put forth. Anyone can submit ideas, build their team, and put the idea up for a company-wide vote.

This past November, PayPal’s second annual Global Innovation Tournament involved over 2,500 ideas submitted from 45 PayPal locations. The top three finalists presented to a panel of executive judges during a live virtual event watched by employees worldwide. Check out the following video to see how the tournament was brought to life.

We also have an idea portal that’s been around a long time – I personally have submitted close to 1000 ideas via the portal. The ideas are triaged by a team to get them to the right people in the company. The best part about this is that it is an open platform that anyone in PayPal can see, and the ideas are all searchable. If you want to look at ideas about robots and cross-border payments, you’ll probably find them there. It is a great source of inspiration, like an encyclopedia of ideas.

Sri: Can you give me a specific example of bottom-up innovation at PayPal?

Mike: Some of our best ideas come from when someone sees a problem that they want to solve. The Venmo emoji autocomplete idea was born while a Venmo engineer and his girlfriend were at dinner and his girlfriend was struggling to find the perfect emoji to pay him back. She said, “I wish I could just type in ‘pizza’ and the emoji would show up.” The engineer went home, built the first iteration of the emoji autocomplete into a test version of the Venmo app that night, and emailed a download link to the product, engineering, and design teams. The next day, he and a designer further collaborated and submitted that version of the Venmo app to Apple’s App Store review team. Less than a week later, we launched the emoji autocomplete feature to Venmo’s millions of users.

Sri: People having a personal passion can sometimes generate amazing ideas. There are specific areas where we invest as well, like our Blockchain Research Group. Tell me about that model of innovation.

Mike: Sometimes within innovation, you need to bring in deeper expertise, like our Blockchain Research Group. These are experts in blockchain doing deep research, looking at how we can use blockchain to serve our customers in the next 2, 5 to 10 years. They are constantly doing roadshows in the company about what they are working on and interacting with the product teams to see how blockchain might be used for customer problems they are trying to solve.

Unlike a lot of other tech companies, we don’t have a centralized R&D structure. But we do structure innovation in terms of Horizon 1, 2, and 3.

Sri: Correct. Horizon 1 innovation happens on a daily basis. Horizon 2 innovation is between one and three years, and Horizon 3 innovation is beyond the 3-year time frame. In terms of investment frameworks, I think there is an 80/20 split (80% going towards Horizon 1 and Horizon 2). For Horizon 3, I believe in the concept of investment time out. You have a hypothesis, you give it time, and unless you are hitting milestones you have come up with in terms of critical assumptions, you take the investment away. That allows the cycles to continue and not allow you to be stuck on one idea. Horizon 1 innovation is harder to measure because it is informal and happens day-to-day, and it’s not an explicit investment you are making – the investment is the culture you are building. Horizon 3 formally sandboxes an environment with dedicated dollars and people. The formality of Horizon 3 allows you to do things like investment time outs.

Mike: What are the things you recommend people do to foster innovation?

Sri: Building a culture of innovation is about what we do every day. Day-to-day rituals and engagement are important, including how leaders in the organization are engaging with people who are bringing forth ideas.

There are “show and tell” showcases with no agenda where people have the opportunity to showcase something they are working on or trying to solve.

You can participate in our Intellectual Property program that helps our innovators document ideas for patents.

Our Bravo emails allow employees to give a quick positive nudge to someone demonstrating our core values of collaboration, inclusion, wellness, and innovation.

Our PayPal Expo. This used to be a three-day, in-person event in San Jose that celebrates innovation from PayPal across the globe. This year, we’ve gone virtual.

It could even be something as simple as a pause in an operational review to observe, highlight and congratulate someone for doing something differently.

We even have a talk series called “Learning through failures”. We fundamentally believe we are a learning organization and we don’t always get everything right the first time. We iterate and learn and that is what gives people the permission to think out of the box.

I’d love to hear from all of you on how you manage innovation in the comments section.