Blog: what happens when the disrupters are disrupted
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
There are four themes for the EY World Entrepreneur of the Year awards this year. One you cannot avoid is disruption. It is not a reference to the huge building project going on outside the famous casino in host city Monte Carlo, shattering the peace of the terrace cafés.
It is about business disruption — how do you ride the wave of change rather than be swamped by it?
The Financial Times’ answer is partly to move from print to digital and from words to more pictures.
Laurence Buchanan, EY digital lead advisory EMEIA, had a blunt warning: even start ups would struggle to cope with the pace of change. “We have barely begun to see the level of disruption we are going to go through in the next decade. That will represent an existential crisis to every business in the world.
“At the board level there is not enough understanding yet. I do not think boards have enough knowledge of actually living through digital disruption.”
The fascination on Thursday was hearing about a disrupter being disrupted. PayPal, the payment system, was founded in 1998 and floated in 2002. It was spun off from parent eBay last year amid fears its progress was stalling.
Dan Schulman, PayPal’s chief executive who dropped in on a trip back to the US from Israel, said the spin-off had been a success. It has been buying businesses and investing in innovation.
“The biggest impediment to our future is our historic success. Reinvention is really important . . . 80 per cent of the Fortune 100 from the 1950s do not exist any more.”
One buy was Venmo, used by millions of US millennials to send money to each other and make payments. He hinted it would soon expand abroad. “It is in the US only right now,” he said, before adding: “I’d better stop at that.” It will try to link users with the 14m companies who accept PayPal payments so it can earn revenue — millennials do not like paying for things themselves.
He pointed out the business still only had 0.5 per cent of the payments market. “We want to democratise financial services. Moving money should be a right, not just for the affluent.”
Mr Schulman painted himself as a disrupter. Dressed in sandals and T-shirt, he said: “I dress more like Occupy Wall Street than Wall Street.”
And the biggest applause came when he got political. PayPal decided not to open a 400-strong office in North Carolina after it passed a law restricting gay rights. Mr Schulman got death threats but he said he would do it again “100 times out of 100”. “Businesses need to be a force for good in the world,” he said.
As for competition, it is “like gravity. It’s always there”.
Some of the competition is in Monaco. Tahsin Isin, of Iyzico, a Turkish online payments provider, was on stage before Mr Schulman as we were introduced to five “accelerating entrepreneurs” who could be big in the future. It has already raised $9m and wants to spread across the Middle East.
Another finalist is Stripe, the US payments provider valued at $5bn, founded by the 20-something Collison brothers from Ireland.
The country winner for Canada, Michael Donovan, also spoke to the media. One hopes US film-maker and capitalist scourge, Michael Moore, does not know that Mr Donovan, who made his name as producer of Bowling for Columbine, Mr Moore’s anti-gun documentary, is an EY World Entrepreneur of the Year finalist.
He explained how DHX Media, his children’s animation studio, had been able to compete with big rivals thanks to digital technology. Shows can be created for a fraction of the cost without expensive facilities — and sold not just to TV stations but also to the likes of Netflix and Amazon. It has also acquired a vast archive.
But he outlined the scale of the challenge. Asked if DHX would one day be bigger than incumbent Disney, he joked: “We are a $1bn company, they are a $200bn company. And they are an excellent customer.”
Finally, came proof there can be merit in staying the same. The Czech Republic finalist’s company, GZ Media, still does what it did 30 years ago: presses vinyl records.
In the 1990s when compact discs took off, boss Zdenek Pelc decided to mothball rather than destroy his pressing equipment.
In 1994 the company produced about 300,000 albums. In 2015, that number had risen to 20m as hipsters rediscovered vinyl. Mr Pelc says the company is now the world’s biggest producer of vinyl, though it also makes posh packaging for Scotch whisky and French perfumes. But even Mr Pelc cautions: “Never be complacent: today’s success could be tomorrow’s catastrophe.”
This story has been amended since original publication to clarify the relationship between eBay and PayPal.
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