PayPal nears deal for Braintree Payments(blogs.wsj.com)
blogs.wsj.com
PayPal nears deal for Braintree Payments
http://blogs.wsj.com/digits/2013/09/22/paypal-nears-deal-for-braintree-payments/
13 comments
I'm CEO at Braintree. I'm not going to comment on any of the rumors that are being circulated. I will tell you that we won't do anything that would compromise our product or our service. We are all fully committed to that. More on that here --> https://www.braintreepayments.com/blog/more-committed-than-e...
> I will tell you that we won't do anything that would compromise our product or our service.
Wouldn't be the first time someone said that prior to being acquired, only to realize later that they do not have the influence over upstream decisions that they imagined they would.
Wouldn't be the first time someone said that prior to being acquired, only to realize later that they do not have the influence over upstream decisions that they imagined they would.
I'm no babe in the woods. I've been through multiple acquisitions in the past as well as multiple funding rounds. With either you run risk of meaningful changes for employees and customers if you don't choose well and structure properly. Lots of founders and CEOs take the cop-out of "I didn't know." You won't find any of that here.
When I give my commitment and my word that we won't do anything that would compromise our product or our service, I do so with eyes wide open. Again, I'm not making any statement about the rumors that others are fueling. However, I do want to be very clear about our principles and the fact that everything we do will be driven by our commitment to deliver great products and fantastic service to our customers. That means I’d have to be very confident in our ability to do that for any path we choose – with no cop-out of “I didn’t know”. There will be no deviation from that – you have my full commitment on that.
When I give my commitment and my word that we won't do anything that would compromise our product or our service, I do so with eyes wide open. Again, I'm not making any statement about the rumors that others are fueling. However, I do want to be very clear about our principles and the fact that everything we do will be driven by our commitment to deliver great products and fantastic service to our customers. That means I’d have to be very confident in our ability to do that for any path we choose – with no cop-out of “I didn’t know”. There will be no deviation from that – you have my full commitment on that.
I am an extremely loyal Venmo user (I generally make people sign up if they want fast payment from me, and don't feel bad since everyone I have onboarded has become a loyal user). Thanks for coming in here and talking about this, since I'm not a huge PayPal fan and definitely worried that this type of move could break what I love about Venmo (if it happens). Keep up the good work on Venmo, it's really been a huge improvement in my life, from buying movie tickets, to splitting checks, to letting me use my rewards card to make big purchases for a group and instantly get paid back since the mobile implementation is so good.
While you are here, one interesting positive I could see from joining up with PayPal is letting people use Braintree without a merchant ID (the main drawback of Braintree, I run a Shopify store for someone and can't get Chargify set up on Braintree because of this).
While you are here, one interesting positive I could see from joining up with PayPal is letting people use Braintree without a merchant ID (the main drawback of Braintree, I run a Shopify store for someone and can't get Chargify set up on Braintree because of this).
Why so defensive? You clearly are commenting on the rumors... just sayin'. Cool company by the way! Sounds like you've had a lot of success. Paypal isn't very cool, though...
>> Paypal isn't very cool, though...
That's where the defensiveness comes from. I love Venmo and do not like PayPal. Coming in here helped make me feel a bit better about this potential merge.
That's where the defensiveness comes from. I love Venmo and do not like PayPal. Coming in here helped make me feel a bit better about this potential merge.
Hi Bill. I've only been a customer for a few years, but I've been super impressed with the level of customer service. If I have an API question or a problem, I always get a real, human, thoughtful answer - not a copy/paste from the documentation that I've already read.
So while I understand the necessity of the linked blog post, it doesn't really address my concern - which is that PayPal has notoriously awful customer service, and the thing I value most about your company is your customer service. And despite all of your best intentions, the culture of very large companies inevitably affects (or replaces) the culture of the companies they acquire. I've been acquired before. I know how it goes.
At the end of the day, all I care about is that I continue to get the same level of customer service from your company. The moment that changes, I'll go somewhere else (probably Stripe).
So while I understand the necessity of the linked blog post, it doesn't really address my concern - which is that PayPal has notoriously awful customer service, and the thing I value most about your company is your customer service. And despite all of your best intentions, the culture of very large companies inevitably affects (or replaces) the culture of the companies they acquire. I've been acquired before. I know how it goes.
At the end of the day, all I care about is that I continue to get the same level of customer service from your company. The moment that changes, I'll go somewhere else (probably Stripe).
Customer service is absolutely part of the commitment. It's a huge part of why we've had such phenomenal growth and have so many fantastic clients. We are absolutely intent on delivering that for years to come and wouldn't consider anything that would degrade our service. More on that in my response above.
Bill, I have the utmost respect for Braintree. But if this rumor is true, all I can say is "famous last words." PayPal have demonstrated an inability to operate competently.
And we just notified our entire customer base that they can kiss their Paypal problems goodbye because we've switched to Braintree. How does that look now?
I have my fingers crossed that this sale does not go through.
And we just notified our entire customer base that they can kiss their Paypal problems goodbye because we've switched to Braintree. How does that look now?
I have my fingers crossed that this sale does not go through.
I would love to hear DHH's thoughts on this because:
a) He recommended Braintree from Day 1 as an interesting payments company.
b) He liked that they were Bootstrapped.
c) They took a lot of funding and that seems to have gone sour.
d) They are being acquired - in what looks like a desperation sale.
e) They are being acquired by Paypal - which I am sure I have heard him hate on.
If he will talk publicly about this...that would be quite interesting.
I imagine now, he may consider moving all his payments to Stripe.
a) He recommended Braintree from Day 1 as an interesting payments company.
b) He liked that they were Bootstrapped.
c) They took a lot of funding and that seems to have gone sour.
d) They are being acquired - in what looks like a desperation sale.
e) They are being acquired by Paypal - which I am sure I have heard him hate on.
If he will talk publicly about this...that would be quite interesting.
I imagine now, he may consider moving all his payments to Stripe.
Interesting - can you provide sources for b, c, d? In particular, isn't b) and c) contradictory? Just want to read more on this - not trying to be adversarial.
BrainTree has been bootstrapped since it's beginning until October, 2012 when they raised $35 million. And the guys at 37 Signals sure love BrainTree since, that is what they use to process payments for 37 Signals. Also, BrainTree was featured in their famous 'Bootstrapped, Profitable and Proud' series http://37signals.com/svn/posts/2800-bootstrapped-profitable-...
Thanks for providing that link...that's what I was remembering, but couldn't find it.
Although I don't know the specifics for Braintree, it's not contradictory to accept VC money for bootstrapped companies. If a startup goes from 0 to 10M revenue without taking any outside investment then that puts them squarely in the bootstrapped camp. However, if they then realize they're in a winner-takes-all market and that they need a lot of money in order to scale up, then they can still accept VC money at that later stage.
But wont most of Braintree's customers jump ship rather than deal with Paypal? They're effectively killing it by buying it.
As a braintree customer, this deal does give me cause for worry since I jumped to Braintree because of paypal.
However realistically, since all of our production code is already completed and tested against Braintree, we are not going to switch unless they do something really dumb like close their api.
For me as long as Braintree continues:
+ Using their 'vault' for credit cards
+ Continues having a great api
+ Continues have great customer service.
I'm going to watch and see what happens.
However realistically, since all of our production code is already completed and tested against Braintree, we are not going to switch unless they do something really dumb like close their api.
For me as long as Braintree continues:
+ Using their 'vault' for credit cards
+ Continues having a great api
+ Continues have great customer service.
I'm going to watch and see what happens.
I worry that PayPal might change the “Take your vaulted cards to another processor” policy…
If they do, it’s going to cause a lot of headaches for customers.
If they do, it’s going to cause a lot of headaches for customers.
Well that assumes that the business owner wants to switch out of Braintree. But you are right that if Paypal closes the garden, you are stuck in that silo.
But on the other hand, it isn't so different than being walled into AWS for instance in terms of production impact time.
But on the other hand, it isn't so different than being walled into AWS for instance in terms of production impact time.
It’s not the code changes or downtime you have to worry about — it’s convincing all of your customers to enter their billing details again (if you can’t get the vaulted cards transferred).
This is one of the major value propositions with Spreedly. Independently vault your cards.
> They're effectively killing it by buying it.
I don't see how you come to that conclusion. This is not the first time PayPal has acquired a popular payment processor. In 2005, they purchased Verisign's payment processing business, Payflow Pro. I don't recall them making any noticeable changes to it after acquisition other than changing the word "Verisign" to "PayPal" everywhere. Is there some reason to believe that a Braintree acquisition will not be treated similarly?
I don't see how you come to that conclusion. This is not the first time PayPal has acquired a popular payment processor. In 2005, they purchased Verisign's payment processing business, Payflow Pro. I don't recall them making any noticeable changes to it after acquisition other than changing the word "Verisign" to "PayPal" everywhere. Is there some reason to believe that a Braintree acquisition will not be treated similarly?
Absolutely. Companies approach Braintree because they want a no-bullshit payments processor. Based on PayPal's past antics it hardly it hardly has the reputation for which people seek Braintree.
I think this is the perfect opportunity for Stripe, and other payments processors that cater to younger more progressive companies, to get some clients to jump ship.
I think this is the perfect opportunity for Stripe, and other payments processors that cater to younger more progressive companies, to get some clients to jump ship.
To read people like Patrick McKenzie, who ran businesses on Paypal and don't have a lot of negative things to say about their underwriting process, two big reasons why they've moved to Stripe:
(1) The Paypal API is apparently extremely complicated
(2) Processing payments with Paypal takes your users off your own site, which costs conversions
Buying Braintree could immediately address both those problems for Paypal.
(1) The Paypal API is apparently extremely complicated
(2) Processing payments with Paypal takes your users off your own site, which costs conversions
Buying Braintree could immediately address both those problems for Paypal.
Yes, PayPal is awful once you've used Stripe and Braintree. I hope that if this happens PayPal just lets Braintree operate as it has before. Legacy PayPal users can keep PayPal, and PayPal doesn't have to fight the battles it has been fighting to keep customers from jumping ship, and can just onboard them to Braintree. Unfortunately, I'm not super optimistic about PayPal's competence.
No. That line of thinking is incredibly tired.
Why not? We switched from PayPal to Braintree explicitly because PayPal was too broken for our use case. Is there some indication to expect that Braintree won't be integrated into the rest of PayPal in the case of an acquisition?
I think he's got a point - users won't jump ship because Braintree (and Venmo) are now PayPal products, they'll jump ship because PayPal ruins them with fees, long payout times, etc...
If I were a Braintree customer I'd jump ship now before things get bad. Why wait? PayPal have a long history and are a known entity. There's no reason they wouldn't turn Braintree into something that feels like a PayPal company shortly after the celebrations are over and the ink is dry.
If you're a Braintree customer, jump ship while times are good before the storm arrives.
If you're a Braintree customer, jump ship while times are good before the storm arrives.
Stripe is about as good as Braintree in my experience (at least in terms of online payments processing and powering a shopping cart), and has fantastic customer service. But if Braintree is working, why switch now? Stripe is really easy to integrate if you have to later.
Braintree kills its competitors in P2P payments though. Venmo has been a huge improvement in my life.
Braintree kills its competitors in P2P payments though. Venmo has been a huge improvement in my life.
Why wait until things get bad? That's like being in an area where there's a real tsunami warning and saying "hey, it's calm now ... I'll just wait until the waves get here before I leave!" The waves will come and you'll be caught off guard.
If PayPal buys Braintree it's likely the PayPal culture will rub off and they'll stop being the great company they are now. This is the reason I'd dig my well before I'm thirsty and switch to a company that doesn't appear headed for a beheading by PayPal.
If PayPal buys Braintree it's likely the PayPal culture will rub off and they'll stop being the great company they are now. This is the reason I'd dig my well before I'm thirsty and switch to a company that doesn't appear headed for a beheading by PayPal.
That's not a good analogy. Switching from PayPal to Stripe is currently very easy (I did it a few weeks ago). Nothing like fleeing an area with a tsunami warning. When switching costs are that low, why not stick with something that is working?
Because what happens when your Braintree account gets arbitrarily frozen under PayPal's risk management policies? It might be working today, but that doesn't mean the rug won't be pulled from out underneath you, and at that stage there will be real consequences for your business, i.e. frozen funds and drama. Then you've got to do the whole migration while putting out a fire.
If you wouldn't want to do business with PayPal, you probably wouldn't want to do business with Braintree if it's owned by PayPal. A different brand doesn't mean that they're not being operated by the same masters.
If you wouldn't want to do business with PayPal, you probably wouldn't want to do business with Braintree if it's owned by PayPal. A different brand doesn't mean that they're not being operated by the same masters.
Aren't you a PayPal (or ex-PayPal) employee? Surely you might have a little bias here!
Too bad. I had nightmares with Paypal and always considered Braintree as a viable alternative. I'll be switching off soon.
One day a payment company will refuse to be acquired and give paypal a run for their money. Paypal fees are just too expensive and I have to believe there's a company who will want to disrupt and take on Paypal rather than succumb to them.
PayPal's problem isn't so much their fees (although that's an issue) but their utter disregard for their customers. The fact they'll arbitrarily freeze an account for seemingly nothing more than shits and giggles is counter to the kind of stable experience you'd expect and want from a payment provider. The fact there is little recourse when the fuckup fairy strikes is what's most concerning though.
It might be that this is indicative of the core value of Paypal's fraud prevention intelligence. All the smart people I know who work at Paypal are working on fraud prevention (even the analytics guy I know there admits to providing more data to the fraud prevention teams than anybody else).
I wouldn't be very surprised if Braintree decided to be acquired because they learned that doing "enough" fraud protection requires the sort of fees that Paypal charges – _plus_ a dataset like eBay to mine for patterns and to instrument up for real-time triggers.
Thinking about it (as in, this is not some long-held considered belief, just some random thought that's just popped into my head), it'll kinda surprise me if anyone smaller than Paypal/eBay, Amazon, Facebook, or Google, will be able to compete longterm as a payment company. If you don't have firehose-sized transaction data to monitor (Paypal/Amazon) or strong social network signals about identities (Facebook/Google), I doubt you're going to be able to create fraud protection as effectively as those players, and that's going to cost you and your (non-fraudulent) customers and be reflected in the transaction fees you'll end up non-competitively charging.
Random thought number 2 – I wonder if there's now some opportunity to start up a non-US based payment company, and lobby for privacy law changes in the wake of the post-Snowden knowledge about how the PRISM-linked companies are mis-using personal data, especially of "non US persons"? I wonder how hard you'd have to push the Brazilian government to make using PRISM-linked or US based companies as payment services illegal - for domestic privacy reasons? (Unfortunately, I suspect the opportunities for me in Australia to lobby for laws protecting Australian citizens from surveillance by the NSA won't get any support at all from our in-bed-with-and-beholden-to-the-US government.)
I wouldn't be very surprised if Braintree decided to be acquired because they learned that doing "enough" fraud protection requires the sort of fees that Paypal charges – _plus_ a dataset like eBay to mine for patterns and to instrument up for real-time triggers.
Thinking about it (as in, this is not some long-held considered belief, just some random thought that's just popped into my head), it'll kinda surprise me if anyone smaller than Paypal/eBay, Amazon, Facebook, or Google, will be able to compete longterm as a payment company. If you don't have firehose-sized transaction data to monitor (Paypal/Amazon) or strong social network signals about identities (Facebook/Google), I doubt you're going to be able to create fraud protection as effectively as those players, and that's going to cost you and your (non-fraudulent) customers and be reflected in the transaction fees you'll end up non-competitively charging.
Random thought number 2 – I wonder if there's now some opportunity to start up a non-US based payment company, and lobby for privacy law changes in the wake of the post-Snowden knowledge about how the PRISM-linked companies are mis-using personal data, especially of "non US persons"? I wonder how hard you'd have to push the Brazilian government to make using PRISM-linked or US based companies as payment services illegal - for domestic privacy reasons? (Unfortunately, I suspect the opportunities for me in Australia to lobby for laws protecting Australian citizens from surveillance by the NSA won't get any support at all from our in-bed-with-and-beholden-to-the-US government.)
There could be ways round the big-data-required problem. You could charge different transaction fees depending on how good your data is on somebody and allow them to provide data to improve your confidence in them. Or require deposits from people and return them over time.
That's a good idea - but I suspect it'd be a much harder sell to end user merchants (and their web developers).
Explaining "our fees are based on your customers fraud risk, only 0.9% + 25c per transaction for people who've liked your facebook page and have more than 100 facebook friends and an account more than 24 months old, up to 5% + $1 per transaction for people using TOR or coming from ex-Russian-state ip addresses" isn't going to go down so well as "Paypal costs 2.9% + 30c/transaction and works globally in any currency, you can probably get half that rate from you own bank if they'll give you an internet merchant number - but they'll probably only give you local currency transactions."
Explaining "our fees are based on your customers fraud risk, only 0.9% + 25c per transaction for people who've liked your facebook page and have more than 100 facebook friends and an account more than 24 months old, up to 5% + $1 per transaction for people using TOR or coming from ex-Russian-state ip addresses" isn't going to go down so well as "Paypal costs 2.9% + 30c/transaction and works globally in any currency, you can probably get half that rate from you own bank if they'll give you an internet merchant number - but they'll probably only give you local currency transactions."
Agreed. It might be easier to charge the customer rather than the merchant. If as customer I could choose from a list of payment providers and get a different fee from each one then the competition would be very transparent. Plenty of barriers to overcome to get to that point though.
I get their fraud protection focus. A huge reason they stay around is that you can use them without a merchant ID, which banks are a lot more hesitant to hand out these days. However, Stripe, and more recently, Shopify Payments, offer the same advantage without the PayPal-ness.
Congratulations to the shares and options holders, but that is too bad. My first introduction to Braintree was this Profitable & Proud article from 37signals[1]. Braintree's principles of providing exceptional service both to business people and developers, their work to improve the overall industry, and their concern for the people employed by them will probably not survive being merged into PayPal.
1 http://37signals.com/svn/posts/2800-bootstrapped-profitable-...
1 http://37signals.com/svn/posts/2800-bootstrapped-profitable-...
I'm so glad I didn't use Braintree now. Thank you Stripe for opening the UK Beta at just the right time back when.
I think it's great for braintree if they get acquired by PayPal. Unfortunately, I won't use their service since PayPal is one of the worst run companies I can think of aside from eBay. The CEO of Braintree doesn't control the company, the majority shareholders do (and in this case it sounds like it will be PayPal).
>> PayPal is one of the worst run companies I can think of aside from eBay.
Probably related.
Probably related.
Seems like an inevitable downgrade to me - real pity.
Also, as always, less competition means a worse overall offer for devs.
Also, as always, less competition means a worse overall offer for devs.
As with all acquisitions, if they give them a healthy amount of autonomy and give them more resources than they would've had as a startup, then I can see this going pretty well. Huge and improbable "if", but it's worth pointing out.
PayPal and Square are engaged in a pitched battle to win mobile and small-shop business. Square does about 10% of PayPal's volume.
If stripe was a public company, their share price would increase today and even more-so when this is official.
Good thing i stayed away from braintree, paypal be a perfect match for them considering both are shit
Thank you for that low brow insight gem.
My business nearly went under because of SHITPAL
how is that for an insight?
how is that for an insight?
Braintree is much better.