Shopping cart
Image: Lisa Krymova

Could PayPal and Pinterest build a shopping super app?

Source Code

Good morning! This Thursday, PayPal is showing interest in Pinterest, Cambridge Analytica still haunts Mark Zuckerberg, and Trump's back to take on Big Tech.

Chasing the social shopping dream

Social commerce has been a dream as long as social networks have existed. And even before, really: Online shopping influenced by celebrities was a key selling point of Time Warner's Full Service Network, an experimental interactive TV service that rose and fell at the dawn of the internet age.

The latest to chase this vision is PayPal CEO Dan Schulman. In January, he paid $4 billion for Honey, a price-tracking tool that got his payments company deeper into shopping discovery.

PayPal now appears poised to deepen its social commerce bet: Bloomberg and others reported Wednesday that PayPal was in late-stage talks to acquire Pinterest for almost $40 billion.

  • Pinterest stock soared 12% in a wild day of trading that saw share trading halted twice.
  • PayPal shares dropped almost 5%, suggesting investors weren't fans of the rumored deal.
  • A Pinterest spokesperson declined to comment, and PayPal representatives didn't respond to a request for comment.

It certainly needs to respond to the threat of Shopify. Shopify builds storefronts for retailers and also helps them sell socially on Facebook and Instagram.

  • PayPal is a payment option on Shopify. But that's a weak strategic position, with Shopify pushing Shop Pay on merchants and customers.
  • Shopify's deal with Affirm for "buy now, pay later" shows PayPal's vulnerability. That's a huge number of merchants and consumers PayPal will have a hard time tapping for "Pay in 4" purchases.
  • PayPal has admitted it didn't focus enough on retailers. "The one area that we got a little bit away from was the merchant side," Greg Lisiewski, who's in charge of PayPal's pay-later services, recently told Protocol.

Yet the hype around social commerce has led to a lot of disappointment. Facebook in particular pushed the idea of social commerce early on, without much to show for it.

  • Most social networks are for chatting, not commerce, which means conversion rates are low, advertising is expensive, and financial results are disappointing.
  • Two social networks have proved to be exceptions to this rule: Instagram, with its emphasis on sharing lifestyle-oriented visuals, and Pinterest, whose pinners typically use it to bookmark things they want to buy.
  • Pinterest is also one of the few purchasable options for PayPal. Shopify is too expensive at a market cap of $185 billion and Etsy's too, well, twee.

And Pinterest and PayPal have tried to partner before. It ... didn't go well.

  • Buyable Pins, announced in 2015 at an event in Pinterest's San Francisco headquarters, was an attempt to get shoppers to buy items directly on Pinterest without leaving the site. PayPal's Braintree and Stripe were partners.
  • As I reported at the time, Pinterest negotiated an unusual arrangement with PayPal and Stripe. Pinterest didn't process transactions itself. Instead, it passed card numbers on to retailers' existing processors.
  • Pinterest said it hoped to make money by featuring Buyable Pins in ads it sold.
  • In 2018, Pinterest quietly abandoned Buyable Pins.

Still, PayPal could integrate purchasing more deeply if it owned Pinterest. One thing PayPal believes it's particularly good at is the checkout experience; it has decades of experience in optimizing the buy button.

  • Pinterest could use some help in the product department. Under founder-CEO Ben Silbermann, it's been notoriously slow and cautious, and focused on the experience of consumers, not retailers or advertisers.
  • PayPal hasn't had the best reputation as a product innovator, either. But that seems to be changing under Schulman, with renewed focus on turning it from a payments service into a super app.
  • It's fascinating to think about what Pinterest's designers and PayPal's payment engineers might come up with together.

Deals fall apart, and this one might, too. What's certain is that PayPal needs to get deeper into shopping, and Pinterest needs to find a strategy for competing with the likes of Amazon, Google and Facebook.

— Owen Thomas (email | twitter)

A MESSAGE FROM PROEDGE, A PWC PRODUCT

Target critical skill gaps and close them with engaging and personalized employee learning. Empower your people with ProEdge, the single solution that can upskill entire organizations and help keep them ahead of the ever-changing demands of the digital world.

Learn more

People are talking

Sen. Richard Blumenthal wants Mark Zuckerberg or Adam Mosseri to testify on Instagram's impact on kids:

  • "Parents across America are deeply disturbed by ongoing reports that Facebook knows that Instagram can cause destructive and lasting harms to many teens and children."

B. Pagels-Minor, the previously unnamed Netflix staffer who was fired, attended the walkout yesterday:

  • "When I thought about why I was participating, it's that my son does not grow up with content that hates me."
  • Actor Elliot Page also expressed support for the walkout.

On Protocol | Policy: Transparency is great, but policy counsel Sara Collins doubts it leads to much change:

  • "I don't know that it reduces harm in any significant way, and it sure doesn't incentivize the companies to change anything about what they're doing."

U.S. Deputy Attorney General Lisa Monaco wants corporate America's help in rooting out cyber criminals:

  • "The bottom line is this: I believe it is bad for companies."

On Protocol | Enterprise: Twilio has made a few big purchases, including Segment. It now needs to prove they can work together, Wolfe Research's Alex Zukin said:

  • "The key is: Can they execute in different worlds?"

Making moves

WeWork is going public. The company merged with a SPAC, and shares will start trading today.

Twitter bought Sphere, a group chat app. The purchase adds to a long list of acquisitions by Twitter this year.

Daniel Brennan is leaving Twitter after 11 years there as Deputy General Counsel.

Sanjay Poonen is joining Snyk's board of directors. Poonen had been VMware's COO for eight years.

Frank Russo is Calendly's first CISO. Russo previously served in leadership roles at Ripple and Salesforce.

Andre Mancl is joining ChowNow as CFO. He last served as the global co-head of internet investment banking at Credit Suisse.

Nellie Hayat is joining Density as its first workplace innovation leader. She's worked on workplace strategy at Stripe.

In other news

Donald Trump is launching a tech company. It's called Trump Media and Technology Group, and according to its pitch deck it's going to crush everyone from Facebook to AWS. The first flagship app? A Twitter-ish app called TRUTH Social.

Pierre Omidyar has been giving Frances Haugen a financial boost, POLITICO reported. The eBay founder's global philanthropic organization, Luminate, has been helping Haugen with press and government relations in Europe.

On Protocol | Workplace: HPE told workers to get vaccinated or get out. As a federal contractor, the company (like IBM and some others) faces tough restrictions under the White House's executive order. Employees have until Dec. 8 to comply.

Mark Zuckerberg will find himself in the middle of a privacy lawsuit that's connected to the Cambridge Analytica scandal. Washington, D.C.'s, attorney general said he plans to name Zuckerberg in the suit since new information came to light.

Amazon will offer more customer insights to third-party sellers. The company said it'll give sellers information like search and pricing trends, but won't share how other brands are performing.

Facebook has new plans for rulebreakers: If someone violates its policies, the platform will demote their Groups content. The company also introduced a tool that lets administrators decide whether to remove flagged content or ask for a review.

YouTube influencers are getting phished. A group of Russian-speaking hackers are proposing fake collaboration offers to creators in order to break into their accounts. After that, the accounts are either sold or used for crypto scams.

"Once Upon a Time in Shaolin" has a new owner: PleasrDAO. The Wu-Tang Clan's special album was sold for $4 million after the federal government got hold of it from Martin Shkreli this summer.

When tech and mindfulness collide

Mindfulness is all the rage. But it sometimes seems like the more we use tech, the less mindful we become. That's what the "Technology for Mindfulness" podcast is all about.

The podcast is run by Robert Plotkin, a computer scientist and patent attorney. Over 100 episodes, he talks about everything from the psychology of tech to productivity during remote work. It also gets at all those questions about how to relax when you can't seem to log off social media, and gives some hard truths about why it's so hard to tune out.

A MESSAGE FROM PROEDGE, A PWC PRODUCT

Target critical skill gaps and close them with engaging and personalized employee learning. Empower your people with ProEdge, the single solution that can upskill entire organizations and help keep them ahead of the ever-changing demands of the digital world.

Learn more

Thoughts, questions, tips? Send them to sourcecode@protocol.com, or our tips line, tips@protocol.com. Enjoy your day, see you tomorrow.

Recent Issues

AWS is all grown up

Why Jack really left