First of all: congratulations to Accel Partners, NEA and the other investors that did well with Braintree’s exit to PayPal. Secondly: I haven’t talked to John or the other editors at SiliconANGLE to see what their thoughts are on Braintree, so I might be out on a limb in my analysis.. and speak only for myself.
That said, I’m not nearly as impressed with Braintree as PayPal is for one simple reason: Bitcoin.
We interviewed Bill Ready, the CEO of Braintree on #theCube back in May at the Accel Partners Symposium, and prior to coming on the air, I asked him a couple of questions to gauge his feelings on the crypto-currency that at the time was dominating the news cycle.
He went on to explain that Braintree had “no plans for the crypto-currency.”
David Marcus, the President of PayPal said today in a blog post: “I admire Braintree because they were one of the very first companies to understand the power of real mobile-first experiences. I’m not talking about traditional e-commerce ported to your mobile device. I’m talking about groundbreaking experiences offered by companies like Airbnb, OpenTable, Uber, and TaskRabbit. Light, powerful, massively disruptive, and thoroughly delightful, they are all powered by Braintree.”
Braintree offers some interesting advantages in mobile first technologies, but based on what I’ve seen of their attitudes towards mobile, they’ve got an eye more towards increased efficiencies and good marketing, not disruption. Braintree is doing some interesting things in Node, some interesting things with big data technologies, and some really interesting partnerships with their customer-facing users. These are signs of an interesting up-and-coming company, but not one that I’d call “disruptive.”
It isn’t as if Marcus doesn’t understand what disruption in the currency market actually looks like. Back in April, he said this of Bitcoin: “So I’ve been spending a lot of time looking at it, and it’s truly fascinating actually: the way that the currency’s been designed, and the way that inflation is built in to pay for miners, and all that is truly fascinating. I think that for us at PayPal, it’s just a question whether Bitcoin will make its way to PayPal’s funding instrument or not. We’re kinda thinking about it.”
Of course, as it has been noted in the Bitcoin community, this could be just lip service from PayPal. They still, as recently as June, have been noted for their strict anti-BTC policies
A recent post on Reddit from back in June detailed exactly how anti-Bitcoin eBay and PayPal have been towards their users.
If you get caught selling Bitcoin hardware on eBay, Paypal will “sever business relationships with you,” they said in an email to a users who sold Bitcoin mining equipment via eBay. Reddit user “bitcointrading” posted  verbatim a letter he got from PayPal Compliance that informed him he was locked out of his PayPal account until he signed an affidavit stating that he understood and would “comply with PayPal’s terms and conditions.”
I wrote this post on an airplane next to a woman who buys and sells silver via eBay and PayPal. She saw me writing this article and volunteered to tell me about her discontent with the service, which centers around the constant tech issues with the site (uploads timing out) and being a frequently hounded by the compliance department.
She has a +1555 rating on eBay and says she makes, on average about $15,000 a month, supplementing her and her husband’s retirement.
Between the increasing issues with PayPal and the decaying infrastructure problems she’s noticing with eBay, she believes she’ll be switching to an alternative site for sellers. What was clear after our conversation that even among it’s most avid users, eBay and PayPal have a serious perception problem; they are definitely not seen as innovators.
Moves like acquiring “good enough” innovators like Braintree won’t give PayPal the edge it needs. It needs to look towards towards true disruption for it’s solution… or it will itself be disrupted out of business.