Facebook made a stunning announcement on Monday when it said it had hired PayPal president David Marcus to run its Facebook Messenger business. The move was a shock not only to industry observers, but to just about everyone inside PayPal, according to numerous sources.
One day later, here’s a look at what the move means for both companies:
At PayPal, Marcus was running a 14,000 person company with $6.6 billion in revenue that was just two years into a turnaround attempt after half a decade or more of neglect. Marcus was absolutely the face of what a new PayPal aspired to be, and he was perhaps their biggest human asset: An entrepreneur-turned-president who talked openly about company failures while painting a picture of a brighter future.
But the PayPal turnaround is far from complete. Its attempts to expand into the physical retail world by getting shoppers to pay with PayPal at brick-and-mortar shops have not yet taken off. It hasn’t yet publicly announced how it will meld the up-and-coming money transfer app Venmo with its own peer-to-peer money service. And its acquisition of Venmo parent company Braintree is less than six months old.
So when Marcus tried to explain why “now is the time” for him to leave several times in his goodbye post, his rationale didn’t add up for me for a few reasons. First, it’s far from “mission accomplished” for him, as I laid out above.
Secondly, he said in the post that he started to realize this past year that his “role was becoming a real management one, vs. my passion of building products that hopefully matter to a lot of people.” But when you take the role of president at PayPal, one would think you know you are are signing up for the most senior management role at the unit. Right?
As a result, the perception around his departure is that he must not have been as confident about the future of PayPal in private as he was publicly. His good-bye post may say otherwise, but his action says the opposite.
As for Facebook, the hire has been greeted with much speculation about what this says about the social network’s plans to play a central role in moving money between people.
The thinking is: David Marcus was just running one of the biggest digital payments companies in the world. Now, he’s running Facebook’s big messaging service. So payments must be coming to Facebook messaging. Facebook will replicate the success of China’s WeChat and other messaging-plus-commerce services across the globe. Done! Next!
Not so fast. Sources familiar with the move say Facebook has not yet made any decisions about how it will try to make money off of the Messenger service. Could Marcus decide that Facebook does have a huge opportunity to let its users send money to each other via Facebook Messages? Sure. Sources say Facebook has indeed considered this possibility, and a recent Financial Times report only fueled these expectations. But it’s far from a done deal and not the main reason he was hired, according to people familiar with the move.
Facebook believes it’s getting a top-notch entrepreneur — Marcus came to PayPal through eBay’s acquisition of his mobile payments company — as well as a bright product mind and marketer. If Marcus and his new boss Mark Zuckerberg end up concluding that the company should indeed integrate money-transfer or e-commerce capabilities into the Messenger service, Marcus’s background should prove useful. But this move shouldn’t be viewed as a telltale sign that Facebook has already decided Messenger will be the home to a Facebook payments service.