Payments Unpacked: The Secrets to Achieving Relevant Ubiquity

Very few people have seen the evolution of digital commerce like Osama Bedier. As an early employee at AT&T Wireless, eBay and PayPal, Osama has helped build much of the technology and infrastructure that powers the world of payments. Beginning his career in a call center, he quickly rose through engineer and leadership ranks at eBay, PayPal and Google, eventually becoming the head of Google Wallet before launching his own payments company, Poynt.

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In this episode of Payments Unpacked, Osama sits down with Yuno Chief Business Officer Carol Grunberg to reflect on his fascinating journey through the early days of e-commerce. From teaching himself to code at a young to building category-defining innovations, Osama credits his career success to having a curious mindset, focusing on removing friction for the end-user, and always looking to achieve "relevant ubiquity."

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Transcript:

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Osama Bedier (00:00)
People have tunnel vision when it comes to payments. They didn't go somewhere thinking, I'm going to go pay with PayPal today. They were shopping. In the back of their mind, they had decided they're going to use their Visa card that they use online or that they're going to use their MasterCard. And that tunnel vision prevented PayPal from being a part of that conversation. And so we came up with this term called relevant ubiquity. You need to be available enough so people think of you like Visa and MasterCard. They don't have to wonder. If they have to wonder whether you're available or not, you've already lost. At PayPal,

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I remember people telling us we're a payments company. We didn't even think we were payments. Like, as far as we're concerned, we were removing friction. A much better opportunity to make commerce easier, to bring people online, to allow them to transact. And so we were removing that friction. And every time we removed friction, we saw the numbers explode. Integrating into a bank was a nightmare. Integrating into any of the existing gateways was a nightmare. How do you make this so simple? How do you make it so that you can do it in one day? You know, average integration took a month or two and into a bank took a year. So we said, can we do that integration in a day, consistently?

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Carol Grunberg (01:16)
Hello everyone and welcome to Payments Unpacked, where we explore stories, strategies, and big ideas shaping the payments industry. I'm Carol Grunberg. I'm the host and the Chief Business Officer at Yuno. Yuno is a global payments infrastructure platform where we make it easy for businesses all over the world to do payments and manage their commerce. Today, I'm incredibly thrilled to introduce a close friend of mine and a true payments visionary and icon, who shaped how the world pays and how the world does commerce and gets paid across all four hemispheres. Osama Bedier. Welcome Osama.

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Osama (01:56)
Wow, that's very kind. Thank you, Carol. I really appreciate it. I'm happy to be here.

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Carol Grunberg (02:00)
I'm so happy to do this with you. This is amazing to see you.

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Osama (02:03)
Same, same.

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Carol Grunberg (02:04)
So I want to do a little bit more on your background because you've touched on so many things and a lot of people know you, but there are still quite a few out there that might not. So let me go into that a little bit more. So you've done so many things in the payment space, including you've been president of GoDaddy Commerce. You were the founder and CEO of Poynt, played pivotal roles in the early days of PayPal and you helped to spin it off from eBay.

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My personal connection with you goes back to our days at Google where we first met. And you were the vice president of Google Wallet and Payments, which is where we first met. So welcome to the podcast. Again, I'm thrilled that you're here.

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Osama (02:39)
Yep. Thank you. Thank you. Yeah, honestly, it's weird that I look back and it feels like multiple lives. I've had a lot of opportunities. feel very lucky. Very lucky.

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Carol Grunberg (02:56)
So let's get into that a little bit. You have had such a fascinating journey. And I think, well, started back in, not even in the US, right? Can we even go into the early?

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Osama (03:07)
It's very true. I was born in Cairo, Egypt and came to the US at the age of eight. My dad came here to do a PhD. I fell in love with computing and coding shortly after. Started playing around. I remember Vic 20. It was like a...

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I don't know if you remember back then, but there's a gaming device that somebody showed me you could hack into and start coding. And I started doing that, fell in love with it. And from that point on, it set me on a journey of figuring out how to wield tech. from there, my dad finished his PhD and went back.

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I begged him to let me stay and finish high school, which he ended up doing. During high school, I got access to an internet account. This is before the web. And I was just blown away by all the things the internet can do. Again, even before the web, I was just fascinated by how the world was interconnecting and knew this is what I wanted to do. I got lucky enough to, while trying to go to school and pay for school here in the US, I found a company called LA Cellular, which later became part of AT &T Wireless, probably the larger part of AT &T Wireless in LA. And I took a call center job there. And in that call center job, I was basically taking tech support. People called in with their phone problems.

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I had to solve them. There's eight binders on my desk. And I felt like was very laborious to go through these eight binders to answer every question. So I emailed. I found the person's email at the bottom of one of the documents. I emailed him, hey, do you have this in digital form? And he emailed it back. And I decided to build a web server and a search engine and make it searchable just so I could do my calls better.

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All my neighbors around me started looking at what I'm doing, like, hey, can I borrow that? It looks very cool. And so I would share it with them. And my supervisor found out, and he came over and told me I can't use unauthorized software on my computer, and that I'm fired. my last day, he me two weeks. My last day, the VP of the call center calls me in his office and says, I looked at your numbers and they're just phenomenal. And call centers, I learned later, were all about numbers. And my numbers were like twice as good as everybody else. And so he said, I noticed that you're being fired for unauthorized software, but I can't ignore these numbers. What do you do? And so I told him about my software and he gave me a full-time job. And so my graveyard shift call center job to pay for college turned into my first step in a web career. He asked me, what do I want to call myself? Because he didn't know what this web thing was that I was using. I immediately said Webmaster, which at the time, if you were around that early, it was like a very cool title. I thought it was the most amazing thing. And he said, done. He also said, you have three head count. Three headcount, I was I think 23 at the time, and I didn't know what to do with three headcount. So hire more people like you and do more of it. And so we built a call center technology group and started just building. And people just were not used to daily releases of software in a call center. It took years to make upgrades happen. And we were just putting out tools daily.

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Carol Grunberg (06:52)
So you just saw opportunities to improve?

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Osama (06:55)
You know, I learned a very important lesson that serves me even today, which was because I was a call center person, because I did the job for about three or four months, I pretty much knew the end user. I didn't need a spec to tell me what they needed to do. I didn't need a spec to tell me what the problems were. I understood it deeply and this ability to understand it and then just start coding, you know, I sketched a few notes, but just start coding to solve my own problems was very powerful. It cut out so much of the back and forth and so much of the bad product development that would otherwise happen because none of these develop like I realized none of the people building this stuff have ever taken calls. And in fact, the two headcount that I had, I made them do three months of calls and work before I let them code.

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And they were very shocked that I'd make, because I hired an engineer. At the time, I was just learning to code. But I hired engineers with deep experience, and then tell them their first three months were taking calls. And then the other thing was, because it was a call center, they ended up understanding the service really, really well from taking calls and talking to customers every day. You end up doing about 100 calls a day.

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So you're talking to 100 customers a day for three months. You end up understanding not just what I need to do, but what is the business doing well and what are they not doing well. And so my insight into the product and services that we were offering was just, felt, in fact, I would argue with people about what they thought they needed inside the company. Because this group was not in engineering.

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It was set up as a weird offshoot of the call center. But anyway, that's what I ended up doing. I also learned a few lessons in corporate politics and how that could get in the way. First, of course, my supervisor wanting to fire me for doing something that, in fact, ultimately ended up being on everybody's desktop. Every call center agent that AT &T Wireless ended up using. That would have never happened that early had he done that. But also, you know, the engineering group, the IT group, as it was called, was very unhappy that the call center decided to build stuff. And so this created a war between IT and call center technology and the two VPs were at it. And then ultimately that battle led to me having to move to IT. And inside of IT, I also realized, you know, people were telling me, why are you working so hard?

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What do you what do you got to prove? Are you just here to make us look bad like calm down a little bit? It was just shocking to me to me that was just weird I felt immediately out of place and and You know so as opposed to in the call center technology group where it was all about giving me as much runway as possible And that made me happy and I was producing and didn't even feel like a job. The IT group was the exact opposite. No, no, no, you can't build something without respect. No, no, no. We need everything signed off three times and we need a budget and we need a timeline. We need to, you know, you can't immediately build it. You can't get the business used to just immediately getting what they want. What are you trying to do? To me, that was like, what's wrong with you people? But anyway.

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Carol Grunberg (10:21)
But then how do we go from that? Okay, so the notion of really focusing on the problem, understanding it, this notion that everyone talks about now, customer centricity and customer first. So this is kind what you're describing before it became a buzzword, right?

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Osama (10:34)
Yeah, well, and I feel like I experienced it firsthand and nobody had to tell me, you know, I wasn't told, hey, look at this. I felt it firsthand. And that's why I said I feel very lucky to have gone through that. And and, you know, I have a visceral connection to it and not just, know, the buzzwords, but that's exactly it. It became so important. And in fact, I felt by the way, my my salary went from like 13K to like 100K within the span of 12 months. was just, to me, these guys were giving me. Yeah, like I couldn't believe that this was, I still didn't feel like a job. And so they were trying to make me happy, but I was super unhappy because I just, in fact, I was happier when I was the guy taking calls and building the software on the side. It felt like more of a hobby and fun.

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And that's why when a friend called me in 1998, and said, hey, we're building an e-commerce group. And e-commerce back then was probably 10 companies total really doing e-commerce across the world. And Gateway happened to be one because they started off as a catalog.

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You you could call them up and they build you the perfect PC and ship it to you for computer enthusiasts, which are also the earliest people online. And so when the Web was gaining speed, these guys were getting a lot of business of, you know, browsing the website and trying to order a PC. And the way they tried to solve it was they gave you a form. that you could pick parts and then that would generate an email which would go to a person that calls you back. And then, you know, so it was kind of a feeder into the sales call center. And what they wanted to do was actually end to end. How can we like allow the consumer to build the computer themselves, like build the specification and then send that directly to the factory, which they had an amazing factory operation where if they get a buildable order, they can produce the machine in 15 minutes and ship it out the same day. And so they thought that would be magic if they could connect the two because it was taking two or three days to get the user to interact with a person to figure out what's available, what's buildable, what works, what's compatible. And so I jumped at the chance because at this point I was just doing a lot of internal web applications. I didn't know anything about e-commerce.

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Carol Grunberg (12:56)
Wow.

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Osama (13:14)
And Gateway ended up building one of their best, most talented group of folks just totally by accident because the customers were the right customers and the demand was there and the problem was a massive problem. In fact, the tech didn't really exist to build it. And I ended up at Gateway running a pretty large e-commerce group.

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And with this idea of building an end to end website, ended up meeting some of my best friends that I still know today. And while buying PCs online commoditized very quickly, there was a war between Gateway and Dell and nobody was making money on building PCs. I think that created a lot of the early lesson of e-commerce. In fact, a lot of those folks ended up at eBay.

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Carol Grunberg (14:03)
So, yeah, so what was that journey and how prevalent was the commerce part of that process?

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Osama (14:10)
That was very present. So eBay at the time was founded by Pierre Omidyar and Pierre had also found his way to an enormous amount of demand. You know, I think it was the equivalent of online swap meet. So nobody knew it would get this big, but it was at least five to 10 percent of e-commerce at the time. And it was his original code that was still running it, code that he wrote himself. And a lot of similar paradigms were emerging that we had seen at Gateway, which was the tech was not keeping up. The demand was so enormous that you couldn't use off-the-shelf software. You couldn't use even databases. Like today, we take a lot of things for granted. You go to AWS and you got all the services available to you. Back then, Oracle couldn't keep up.

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IBM couldn't keep up, Sun couldn't keep up with the level of demand. so you have to have.

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Carol Grunberg (15:03)
We're like in the 2000s now, right? Early?

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Osama (15:28)
Yeah, this is early 2000s and the eBay was doing millions of auctions a day. It was just fascinating and printing money. eBay was profitable from day one, you know, and it was weird because a lot of their payments came in envelopes. Like people paid them in on the literally cash in envelopes. It was, you know, printing money. But but, you know, just keeping the side up, keeping up with demand was a massive let alone expanding because there's so, you know, it started out as, you know, category by category. Pest defense dispensers was a big thing. Beanie babies, if you remember, those were a big thing. And so each craze would create, you know.

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Each area they went into created a lot of demand. In fact, motors became at some point one of the biggest parts of eBay. But each category created enormous demand. And we were just trying to keep up, let alone expand. And that was a vicious fight we had every day. How do you just keep the systems up and running so that we can survive enough to expand? And so we were rewriting basically the applications. They were hiring like crazy.

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And that also we can really date eBay. was some of the best talent in the world as well. And while at eBay, found this tiny company that was just, it seemed like everywhere we went, they were too, despite the fact that we had this competitor. And I was just fascinated because it was a really small company. Everybody you met there would just to blow you away. Every conversation was amazing. And I decided that I got to be a part of this. so I talked to everybody I could to get over to the PayPal group. was a tiny group. It was hard to call it a company, even though they're their impact was enormous. It was a very tight group of folks. Everybody you spoke to was super smart. Every conversation was an enlightening conversation. And so I made my way to PayPal. First is a project manager is the only way I can get in, which is also an important lesson. It reminds me of the Sheryl Sandberg quote. if you have the opportunity, think something along the lines, if you have the opportunity to join a rocket ship or get on a rocket ship, don't ask which seat. Just take whatever, whatever you can. Couldn't be more true.

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And slowly but surely, I made my way to engineering and then engineering management. you know, PayPal ended up being my longest career. I think I was there for 10 years. a little bit longer than Poynt, the company I founded later. And I felt like every year was 10 years of experience. It's just fascinating. When you're at a hyper growth startup, I think it was like 26 or 27 engineers when I started, when I joined. And by the time I left, it was like 4,000 engineers and 14,000 people And it was every I probably held 13 or 14 different jobs. I moved buildings like 12 times, but it was all in one company and just, you know, opportunity after opportunity. was a fascinating journey. Yeah, you know, when I first joined, you know, the goal was all eBay auctions should be PayPal. you know, fact, at the time, something like 30 % of eBay auctions had PayPal on them. so that was a fun journey. Shortly after that, I took on International. We had this goal of following eBay everywhere they were. eBay, think, was in 60 or 70 countries and going to 100 and something over the next few years. So we had a goal of getting to, a hundred countries over the next three years, which is mind boggling, right? At the time people would tell us a hundred countries, are you nuts? You will be happy with three countries in three years, but we just saw this massive demand and by necessity you had to figure out.

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And it wasn't even like now where, you know, countries have kind of learned from each other, on what they're banking industry or banking systems should look like or, you know, what the networks are that connect the banks. Most of these countries didn't have ACH like the systems. didn't have card like systems. They didn't have anything to connect. So we had to be the glue between these things. And in many countries, the laws didn't even exist on the books to do commerce online or payments online. And so we had to operate illegally or just in the gray area and help these countries draft their laws and rules so that it could work. So it's fascinating work.

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Carol Grunberg (20:01)
Right. This kind of payment was so nascent in those days.

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Osama (20:06)
Yeah, it was nascent, but it was already obvious it was changing the world. In fact, At PayPal, I remember people telling us we're a payments company. We didn't even think we were payments. People now look back at PayPal and say, wow, you must be a payments expert. You're at PayPal. We didn't even know we were doing payment. As far as we're concerned, and this was another important lesson, we were removing friction.

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We saw something that should operate way better. Commerce, a much better opportunity to make commerce easier, to bring people online, to allow them to transact. And so we were removing that friction. And every time we removed friction, we saw the numbers explode. The growth explode. And so for us, it was just removing friction. People would tell us, banks would tell us, hey, you're doing payments. And we would say, no, no, we're just making the experience better.

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Even words like issuing and acquiring were very foreign to us. We didn't look at ourselves that way. didn't, know, every bank is organized issuing and acquiring. We didn't organize that way. didn't even know. We, you know, for us it was P2P, right? P2P and, know, we're just moving money between two entities and, you know, it could be two friends or could be, you know, Walmart and Carol, right? For us it was P2P and in fact that foundation.

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The simplicity of a foundation that wasn't cluttered with the business definition of how it should work, but with the fact that you're just moving money between the two entities is what allowed us to scale and add so many use cases on top of it over that time I was there. think PayPal does not go for a trillion dollars, almost a trillion dollars. That wouldn't exist if we hadn't built that simplest foundation of, you know, it's just moving money between two people. And now everything else connects to that system. Right. And we figure out how to enable those connections. And as a result, we became a universal adapter everywhere around the world. We'd connect to every local banking and payment systems because we saw ourselves as the adapters of those two entities sending money. I remember a few turning points at PayPal, the first one was in 2004, where we had an outage for about a week. And it became very obvious we're not just a website anymore. We had hundreds of millions of dollars of people's money. Actually, I think it was about three billion at the time, three billion dollars of people's money. you know, people can't access their money. That's a different feeling. Like people would just, you you could tell you.

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Hey, what do you mean you don't know where my money is? We had we three billion dollars in balances, right? People's real people's money. Forget about the transactions. have people couldn't access their money. And that was a weird experience. It brought home the importance of payments for me in a way that I knew that these transactions were important. I knew, you know, if we had failures that We would make the numbers for the quarter, but the fact that you're dealing with people's lives, you're dealing with their livelihood, you know, and I understood at that point, the number one job of payments is that it works every single time. Yeah, you can't screw up. that, by extension, means trust. If you lose people's trust, it's really, really, really hard to earn it back.

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Now we were intermittently down, so it wasn't a complete outage of seven days. were, we would, know, the first, I think 10 hours or so we were down and that freaked people out. And so we would try to bring it back up. It would be up for a few hours and all this was under this, you know, the weight of the demand. There was just way too much demand for the systems we built. And so, you know, at that, before this point we thought, you know, demand is always good. Yeah, we'll, we'll just deal with it.

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But we couldn't bring the systems back up for more than three hours at the time. it took us about a full week. It turned out to be something on the database side that we were just outpacing what was possible with. won't call out the vendor, but outpacing what was possible with that vendor. They had to do a rewrite of their database to support us.

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But we also couldn't roll back to a known working state which was you know also a big lesson from that point forward I knew that No matter every time we do a release because it was also on the back of a release Every time we do a release We you know, we have to be able to get back to a working state almost immediately if things go wrong and that's served me very well in fact I think a lot of big companies never really got into payments or never or were hesitant to get into payments because of this. the, you know, PayPal did payments. OK, that's what was stake. But eBay, by extension, was what we was at the time. Actually, they own paper by eBay, owned us, and they were carrying shit lists that it was going to blow up their business. And imagine, you know, if you were a bank, you'd be scared shitless that that would blow up to your whole bank's reputation. And so there's a lot at stake.

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Carol Grunberg (25:10)
Right.

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Osama (25:18)
When you get that wrong The other really important turning point was you know PayPal was losing a lot around 2005, 2006. And that didn't really matter because eBay bankrolled. eBay was making a ton of money. It's expensive to build a payment system, super expensive to build a payment system, especially a system of scale. That's why you don't see a new network born every minute. You don't see a lot of new. You don't see a new Visa. You don't see a new PayPal. Yes, we've had maybe Square, Stripe.

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But someone holds on to your funds like a bank and moves money broadly and in such a ubiquitous way, very hard because of this problem. It takes a lot of money to bankroll that. And a lot of it, by the way, goes to fraud because the first sign of a successful payment or commerce system is usually a lot of fraud.

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And so you have to and you have to weather that fraud to learn from it and then combat it later to a reasonable point. In fact, at Google, we went through exactly this and everybody was freaking out. I don't know if you noticed it, but everybody was freaking out at the level of fraud we were seeing in the early days of Google. We managed to get it down to a very reasonable place fairly quickly. I it took us six months, but until you get that fraud and therefore the fraud data so that you could fight the fraud.

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You can't skip that step. And so I learned that pretty early at PayPal as well. But more importantly, eBay started slowing down in 2006. In fact, it went from a Wall Street darling in 2005 to a huge problem in 2006. And that's when we knew that PayPal needed to find its own path. couldn't rely on eBay. And at that point, 97 % of revenue came from eBay and volume and everything else. And so I was asked by Meg Whitman, who ran eBay at the time, to focus on international, sorry, on merchant services. We called it merchant services. And internally, it was actually called off eBay. So we had an eBay business. And we needed to grow this off eBay business. It existed.

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In fact, it predated eBay, but much of it wasn't successful or all of it wasn't successful. eBay was a first success. And as soon as we found eBay, all the resources, all the attention, all the work went towards building out the support for eBay. But now, six, seven years later, eBay is slowing down to almost nothing. I think it went from 80 % plus growth to 15 % growth.

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And slowing down, we said, OK, we've got to figure out how the rest of the web, you know, why are we so successful on eBay, but haven't figured out the rest of the web? And this is where I took, I think, 17 of our engineers and built a what we call merchant services or off eBay business. that was also mind blowing.

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In fact, everybody from the outside looks at PayPal as a successful company from the day it was born to today. But the reality is we have to keep earning our right to exist probably three or four times. If we didn't figure out international, there would have been all these PayPal clones all over the world that would have replaced PayPal's international capability. And that would have slowed down because at some point very soon after that,

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Carol Grunberg (28:48)
Right.

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Osama (28:52)
International became the big driver of growth. And eBay cross border became a huge enabler for people to sell everywhere on the world. Small, you know, two person shops could sell to 100 countries. a big part of what PayPal allowed. And so similarly, you know, this off eBay group ended up building the future PayPal, in fact, later called PayPal 2.0, but we ended up building

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I think within three years it became larger than eBay. It was the majority of PayPal's volume off eBay.

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Carol Grunberg (29:29)
Also, let me get this straight. So what did eBay, approximately eight years, the PayPal side did in about three years. It's phenomenal.

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Osama (29:34)
Yeah.

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But you know, because the demand, the web was just in a different place at that point, right? It was just blowing up. And I'd say this idea of, it was a very slightly different problem, you know, when PayPal existed or when before PayPal existed, sending money between two people who didn't know how to exchange money was a fundamental problem, right? Even credit cards weren't popular that much, right? And in fact, I think PayPal made credit cards usable in the early days. That's why credit card companies loved PayPal so much in the earliest days, because it made them usable. There's the idea of entering a credit card number into a form, your billing address, and your shipping address, it feels like all friction, right? And add to that that a consumer doesn't accept credit cards. So we solve those problems. But by the time our off eBay business came around, credit cards were actually fairly popular. Most of e-commerce was being done on credit cards. And so how do you beat a system that's already working? And in fact, we decided that you can't. We decided that if you can't beat them, join them. And we started offering.

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Initially, in fact, actually this is an important lesson as well, we had our first enormous failure. We did this huge project. At the time, I ran engineering and the product team defined the product. the product was take the same eBay button and make it available off eBay. It seems simple enough. That's success. And we launched it. And it was disaster. Like there wasn't a lot of success or a lot of demand. And, you know, obviously you can look back now and say, obviously there wasn't a credit card. So are you working? What do I need? What do I need a button that, you know, let alone a button that's not known and why would merchants take it? All the small sellers, all the ones that all the people couldn't get credit card processing came to us. So we had all the bad actors, right?

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Plus you had all the small guys that didn't sell anything. So we had millions of websites, but not the volume. None of the big guys, no one that was doing volume looked at us seriously. And we couldn't break through to that. We couldn't get those guys excited. And so this is where I kind of removed the lines between product and engineering. I felt like we were becoming more like the big company approach of thinking, you guys do the research and then come and tell us what to build and we'll build it and then we'll hand it over to you and you put it out there and you know, we didn't have time for all of that. So we kind of broke down the lines between product and engineering and marketing and said, we're just one team. Let's go figure this out. And instead of because this was the first really like six to nine months project at PayPal and then we realized that because there was a lot of building to do up until that point, we would just build tiny improvements and release them.

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This was a six-month project. And at the end of it, we realized that we were going in the wrong direction. We went back to weekly releases. Every week, let's put out something and see what customers say about it. And what we found were a couple of really interesting things. One, there's no demand for a payment button. It seems obvious now, what people didn't, consumers and merchants didn't really want a payment button alone. So how do you get them to take a payment button?

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Well, there was demand for credit card processing and we could use our volume to give that processing at a better rate than anybody else. Any banking. was number that was like the first huge insight. Second huge insight was integrating into a bank was a nightmare. Integrating into any of existing gateways was a nightmare. How do you make this so simple? How do you make it so that you can do it in one day? You know, average integration took into one of the nicer gateways took a month or two and into a bank took a year. So we said, how can we do that integration in a day consistently? And third and most important, the application you had to fill out to give an account was just atrocious. The application process was a nightmare. It took you weeks just to be told that you were not approved and had to go to a different bank. So you couldn't even code in that time because you didn't know that you were going to get approved. And so we said, let's make it instant. Let's assume, just look the same. PayPal, let's assume you're approved and let you start coding, let you start processing. And then if you show us you're a bad actor, kick you off. so those three things, and then sorry, the fourth was, and this was really important, to get the amazing rate on payments, the rate that nobody else could offer you, had to integrate the bank And so, and why? Because the merchant had, what's that?

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Carol Grunberg (34:04)
It was a great moat. That was a great moat.

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Osama (34:08)
Yeah. Because, you know, consumers, we had a massive number of consumers, tens of millions of consumers with balances are willing to pay. If the merchant wasn't going to integrate it, then it's useless. So giving you an amazing rate, like the equivalent of a point or two points less than the market to integrate the button. And it took off like wildfire. In fact, we were not ready for how massive this became. know, people like Dell and Walmart and Southwest Airlines and

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You know, I think within six months, sorry, immediately we realized we have so much demand. This was also a lesson. How do you become ubiquitous? We ubiquitous on eBay, but not on the web. How do you become ubiquitous somewhere? I think nobody had really figured that out. We started and I used a lot of these lessons at Google later. But how do you how do you get because, know, we noticed this thing that even if we're available on a website and a PayPal consumer preferred PayPal. They told us they preferred PayPal was available because we did so many surveys. People thought if you're available, I would use your heartbeat. And we would go back to people say we were available. You didn't use it. So this was happening so often. And we realized there's a psychology to payments that wasn't obvious upfront, which is they would tell us, I didn't even see you. I didn't even realize you were there.

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We're like, it's a big yellow button. How could you miss our big yellow button? Like, honestly, I didn't even think. So we realized they had this tunnel vision. People have tunnel vision when it comes to payments. somewhere. They didn't go somewhere thinking, I'm going to go with PayPal today. I'm going to go pay with PayPal today. They were shopping. then, know, already in the back of their mind, they had decided they're going to use their Visa card that they use online or that they're going to use their MasterCard that, you know, they

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They look at daily because it might have a might get stolen or they had already pre decided that tunnel vision prevented PayPal from even being a part of that conversation. So even when we're available, they wouldn't think of us. And so we came up with this term called relevant ubiquity. You need to be available enough so people think of you like Visa and MasterCard. They don't have to wonder if they have to wonder whether you're available or not. You've already lost. You're not relevant to the transaction. And so if we couldn't get to our a certain amount of relevance. So even though we were getting a lot of demand for this thing, it felt like we were spraying the web. Sure, getting a lot of credit card processing, by the way. We became very quickly one of the largest credit card processors in the country. But we weren't getting usage on those buttons. We were putting everything. And so we were just rattling us. Why? Because we made almost all of the margin on a button transaction.

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We made very little because we were almost giving it away on the credit card side. So we were seeing a lot of volume, but not making a lot of profit. We wanted more button volume to equalize it. And so we learned that a couple of things. Until you get to about 30 % of buying opportunities for that consumer, you're not even going to pop in their mind, even if they're a customer.

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And until you get to 60%, they're not going to use you every time you're available And 30%, 60 % from that buyer's perspective, so all the places they buy.

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Carol Grunberg (37:22)
So is this usage or is this place is worth accepting?

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Osama (37:25)
It was usage.

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Sorry, it was acceptance. It was acceptance. If you're not accepted, if they don't see you available. So if they see you one out of three times, then they start going, OK, PayPal is available. I should think about using that next time. When you get to two out of three times, they go, wait a minute, PayPal is available. I should start using it. And so that was super important. it became clear to us that it's not lost. We're not going to keep spraying forever and getting no value. Then we started seeing usage patterns. If I use you two times a week for six weeks in a row, two times or more a week, six weeks in a row, you became my favorite pin. I always used you. And so that became a target as well. How do we get to that level on every user?

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Carol Grunberg (38:12)
So this is the notion becoming top of mind at this point.

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Osama (38:15)
Top of mind and you know that this is also where invented the term if you've ever heard it top of wallet We started we are creating these terms for the industry because as we learn these things Visa and Mascard realized we were actually competing with him now. It was no longer about eBay It was about we were competing with him on the web and that these numbers were up and we figured out that actually Visa and Mascard knew these numbers. They had figured this out against cash earlier. Right. And so they had these playbooks. They weren't just blindly going after everything. They had a plan. And, you know, I actually started reading up quite a bit about how Visa and MasterCard came about and how they won. you know, 1957 Fresno credit card drop. I don't know if you ever heard that story, but that was pivotal how credit cards were created. But but this idea of, you know, the first four categories, Visa didn't just make themselves available to everybody to four specific categories. They were grocery, drug stores, gas stations, and restaurants.

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Carol Grunberg (39:14)
Things we would call essential today in essence.

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Osama (39:15)
Yeah, absolutely. Why?

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Because they were high frequency, you know, multiple use per week type things that you do the grocery store twice a week or the drug store twice a week, you had a gas station at least once a week, you to restaurant least once a week. And so they went after those to start racking up those two transactions a week for six weeks. Right. And so we started to like, wait a minute, we have to this out online. We can't just go after everybody. And so we started going after categories. We realize if the most important category online at the time was travel. Travel was the largest e-commerce category by far. And so we went after Southwest Airlines, gave them an amazing rate, told them we need to be very visible everywhere across your site. Obviously back to the, you know, two to three times or sorry, but at that time we were just going after like be accepted across this. People didn't do all of their shopping online at the time.

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So it wasn't the same idea of but we needed eyeballs, right? We needed the visibility. They needed to see us as many times as possible. And airline were the best. as soon as we got Southwest and we launched, saw they saw a 10 percent immediate 10 percent jump in sales as soon as they added the month.

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Carol Grunberg (40:13)
You needed the eyeballs at the time.

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Osama (40:32)
And so, prove that that, hey, we had a huge customer base. And once you get that visibility right, because we told them exactly how to position it on their website, so wasn't wait till the credit card page, it was a page or two before the credit card page, because we had a lot of the information they would collect to create an account. So don't make them create an account, we'll send all that data back to you. Let's use the fact that it's a much better experience. Let's create, let's not just give you another way to pay, let's create a much, much better experience.

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And easing that friction will lead to more transactions for you. So we were saying all this stuff. We didn't work 100 % sure that it would work on a very large website. But in fact, it did, right? And removing that friction, we created an amazing experience in Southwest. And as soon as they saw that 10 % jump, they couldn't help but tell everybody the industry. And what it did is we had every airline up in the US in six months. They were all begging us. So we got all of the airlines, and that led to all of the travel agencies.

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Carol Grunberg (41:27)
Incredible.

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Osama (41:30)
And so then we started realizing, let's go after the categories and the large merchants. How do you get the eyeballs? It's not the millions. You know, I think there are 12 million sellers online at the time. It's not the 12 million sellers. It's the 500 that matter. It's the 500 where, you know, 90 percent of the buying opportunities were happening. And even if we didn't get the transactions, it doesn't matter. that visibility, the fact that they saw us every day.

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Carol Grunberg (41:58)
It's the relevant ubiquity

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Osama (41:58)
It was a relevant ubiquity.

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And so we created this list of the top 100. We created a team and just went after that list with the team. And what we saw as a result was for every new major player, this was highly concentrated, it still is actually, it's even more concentrated. I don't know if people know this, but like three players have 50 % of all e-commerce in the US, right? So it's massively concentrated.

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But it wasn't as good. It was still constant. 100 players had 98 % of all e-commerce. 50 players had 50 % of it. So we said, let's go after this 100. And for every new guy we signed up and got that relevant ubiquity, we saw a massive increase everywhere else across the network. Because people were starting to be convinced that I could use this everywhere.

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Carol Grunberg (42:48)
I love it. Osama, as I stated in the beginning, it is such a fascinating journey you've had. And you've created so many new things in the industry. And so it's such a pleasure.

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Osama (42:57)
You're too kind. Too kind. Thank you. I look at it as being very lucky and having amazing people working with me everywhere I went.

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Carol Grunberg (42:59)
It's so true. It's so true and I love and you're deeply curious too.

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Osama (43:09)
Yes, absolutely. I think that's probably the most important thing to look for in other teammates. People who aren't curious will not innovate. And people who are curious can't help but innovate.

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Carol Grunberg (43:20)
That's well said. I love it. And thank you so much for this.

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Osama (43:24)
No, thank you. My pleasure. And happy we got a chance to chat even though it's on camera. And look forward to seeing you again soon.

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Carol Grunberg (43:32)
Can't wait to see you soon. Thank you, Osama.

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