Episode 70: Innovation from the inside out


All Xero Gravity episodes

Hosted by Elizabeth Ü

“You have access to tools that you wouldn’t otherwise have. It really allows you to shine a light within an organization that’s not been done before.”

That’s Amit Mathradas. As GM and Head of Small Business at PayPal, he uses intrapreneurialism to help small businesses change the status quo in ways that’ve never existed before.

On Xero Gravity #70, Amit talks about streamlining your e-commerce for the holidays, so as not to have your online shopping carts be among the $4 trillion in US purchases abandoned in 2016. You’ll also hear online payment ideas that’ll increase checkouts, and holiday cheer on ways to better manage cashflow and working capital.

It’s all that and Amit’s two must-haves when it’s time to grow support for your intrapreneurialism ideas, plus more great holiday tips from PayPal.

Small Business Resources:

Episode transcript

Host: Elizabeth Ü [EÜ]

Guest: Amit Mathradas [AM]

EÜ: Hi everyone, I’m Elizabeth Ü and this is Xero Gravity. Meet Amit Mathradas, General Manager and Head of Small Business North America at PayPal. I was super excited to have this conversation with Amit as someone who has been an intrapreneur, and maybe we’ll pause for a second to define that term. For me an intrapreneur is someone who is very entrepreneurial yet is doing that kind of work within the larger umbrella of another company, so as an employer, rather than as a small business owner or someone running the business on their own.

Amit is going to share insights that are relevant to small businesses in the lead up to the holiday rush, which is almost upon us. I’m really excited again to talk to Amit today and I’m sure you are too.

AM: Thank you for having me.

EÜ: What fascinates you most about small businesses? Did you know that you were interested in this marketplace in small businesses or in entrepreneurs themselves before you had that opportunity? Or is this something that you were really looking to get into and here was an opportunity?

AM: I knew that I had a very clear bent towards being in the transactional side of the world. The one where you can actually help run and provide a service, a solution and really help a customer today and see a result of what happens to that tomorrow. With that in mind I knew I wanted to be within this transactional world. I did not specifically know, “Hey, SMB is where it’s at” till I was fortunate enough to get my feet into that, and then it just all clicked for me. That I think these two functions of saying, how do you really go launch new categories, expand and drive new growth, and do it in this fascinating realm of SMB, were the two pieces that came together.

EÜ: For me that’s exactly why I have devoted my entire career to supporting entrepreneurs and small business people because there is so much passion there. I think for me, one of the things that has been really sad to see or somewhat frustrating is that you don’t always have business savvy to go along with that passion. How do you see intrapreneurship and entrepreneurship, small business ownership or being an employee all working together?

AM: For me I think intrapreneurship is the closest you are going to get to actually being an entrepreneur. Obviously working under an organization you get access to certain tools and facilities that you may not have as an entrepreneur, but it is to me personally as exciting as setting up your own business, because it really allows you to shine a light within an organization that had never been shone before, or to actually create a new avenue for that organization to grow which had not been done before or not been thought about.

That to me is, I guess, one, humbling but also, two, very exciting. I think to your question, that effectively led me at some point to go, you know what, I do want to take a little more risk and I’m going to start doing my own thing on the side. And getting that off the ground and helping other people in my network who I’m close to, with the experience that I’ve got talking to thousands of small businesses and helping these thousands and millions of small businesses over the years fulfill their passions.

EÜ: You are in a very privileged position now to be working at PayPal, which means that you have insights into what millions and millions of small business customers are thinking. We have to believe that at this time of year, holiday planning is something that is front of mind for a lot of these businesses. whether they are selling online or otherwise. What are some of the things that you are seeing people stressing out about or how are they solving some of those problems that come up around this topic?

AM: That’s a very timely question. For us we believe, October is when a lot of merchants and businesses start thinking about the holidays and start getting ready for it.

I think there are a couple of areas that pop up for me that we constantly hear from merchants on where they need help. One is cash flow. That is the lifeblood of how our business runs. Cash flow, having enough cash during this time when you’re building up your inventory, building up new assets, building up new ways of going to market to capture the demand is going to be critical.

EÜ: You are speaking my language. I devoted the last 12 years of my career to helping small businesses access capital, so you are definitely speaking my language. I think a lot of our listeners are reading you loud and clear: Cash flow is critical.

AM: Finding your right methods and right avenues to gain access to working capital is going to be critical. The other big one is getting your site up and running. When I mean by up and running, you could already have a site today, but there are a couple of key things that we stress with our merchants especially during this window. One is streamlining your checkout. There is about $4 trillion that will sit in abandoned carts in the US this year.

EÜ: Are you serious?

AM: That is an extraordinary amount of money lying on the table. It’s about a 70% abandonment rate. Streamlining your checkout is probably one of the most critical things you can do to collect and leverage all those customers coming in and ensure that they are actually purchasing something from you.

In line with that mobile-ready is another big one: mobile traffic. From a PayPal perspective 30% of all our transactions are now coming from mobile.

EÜ: Say more about this 70% abandonment rate. This sounds crazy to me. Does this mean — I’m sure that you’ve done a lot of research — but are people… they were timing out because they can’t find their credit card or they’ve decided they don’t actually want to buy it after all? Or are they seeing the total and it’s more than they thought it was going to be, so they just give up on the whole purchase? What’s happening there?

AM: It’s all of that. Payment method is a big one. Are you offering the payment method that I want to pay with — whether it be a debit card, credit card, Apple Pay, Android Pay or even in a lot of cases credit, providing consumer credit so I can pick it up now and pay later? Other things that we see that helps improve this abandonment rate or lower it is providing things like return shipping, free return shipping or buy online and pickup in store so that it becomes far easier to make that transaction complete. Really helps improve some of this abandonment rate.

EÜ: Some of these things that you mentioned are much easier to implement than others.

AM: I actually think today it’s far easier than most people think. To give you an example, if you leverage and standardize on Braintree, which is the PayPal piping which allows you to accept any form of payment, you also get access to consumer credit, and you can deploy that. There are also, PayPal also offers things like if you use PayPal, return shipping is on us.

EÜ: That’s exciting! I remember helping a friend of mine — I actually just saw him today for lunch — he launched a calendar and didn’t have any method of selling it whatsoever. This was back in the late 90s. I helped him start an online web store. Back in the day it was super-complicated, but clearly things have changed quite a bit. What do you think are some of the most exciting innovations?

AM: The big one that I think a lot of people can leverage is what we call PayPal Working Capital. In effect once you have a PayPal account and you are transacting X amount of dollars — based on that we understand how your business and where your transactions are and your need for money — you can borrow and return, and the payments that are paid back are done as a percentage of sales versus it being a fixed installment every month. We know if one day you have $10,000 in sales, you pay a certain percent. If one day you have zero, you are paying nothing.

EÜ: Do you think that a lot of your customers actually understand thing like terms of service when it comes to borrowing money? One of the things that has always concerned me is that there are so many new and different shiny ways of accessing capital for small businesses. I really am concerned. I am genuinely concerned that a lot of these services are taking advantage of small businesses who are desperate for cash, and you are offering them this shiny thing, so often it comes across as like the payday lending of business capital.

AM: I would say the number one way we are protecting merchants is really, once you become a PayPal customer and you are transacting at a certain level, PayPal at that stage only issues loans to customers who we believe are able to support the burden of actually carrying a working capital loan and being able to pay it back, and not basically handing it out to anybody at a certain interest rate. That’s not how we function — it’s very much a transparent process.

EÜ: Great. I’m glad to hear that there are increasing number of options. I think that the capital market space is evolving so rapidly and we see so many new players coming onboard. We know that Amazon has been doing a similar thing with some of their customers, and then there is products like Kabbage that is also providing inventory financing to small businesses that are doing online sales. It’s a really exciting space.

Changing track again a little bit or changing direction a bit, I’d love to hear you speak a little bit about perception of entrepreneurs in today’s business world. I think there is definitely a bit of a fetishization around people who have started their own thing. I almost feel like it’s a guilty secret that intrapreneurialism is this much lower risk way to really manifest a lot of those same skills and to have some of the same success.

AM: It’s, yes, you see it. I think you see it in certain parts, in certain industries and certain parts of the country more than you see it in others. Look, I actually do think an entrepreneur who has built something from scratch with or without the help of others in starting and growing an organization and getting it to be successful is worth something that anyone should be proud of. There is no question in my mind that that is a phenomenal skill set.

Being an entrepreneur also has its own set of challenges and how you get a business or a function or product off the ground is slightly different. The skills that you need and require to do that is slightly different, but at the end of it all the underlying thread of how you get them done and why you are doing it, I feel is pretty similar. It’s about passion, it’s about a desire to change the status quo, it’s about the ability to go drive a new wave or new form of thinking. More importantly it’s about self-satisfaction, and being able to point to something and say, “We got this done, we did this and this never existed before me.” I think that thread links it altogether.

EÜ: Speaking of both sides, I’ve been thinking about entrepreneurialism and intrapreneurialism. Do you think those are innate skills or inclinations even? Or do you think that’s something that can be learned?

AM: I think some of it can be learned. Some of it is about breaking the mold and letting yourself feel comfortable with risk, letting yourself be comfortable with the unknown and not having a framework or a structure to start from. Those things of letting go of your inhibitions around that can be learned.

Some of the other parts of instinct and what works within a certain industry or other, again, is things you can train yourself. But some of it does come from the inside. You have to find the avenue of blending both of them to be really successful, because my belief is you can’t rely completely on your instinct without looking at some of the data and other pieces that support it. The flipside is you can’t go and look at just the data and ignore your gut instinct of saying, “I know that proves one thing but this is where I think we should be taking this, this part of the business.”

EÜ: It seems like the power of persuasion is always so important, both for intrapreneurs and for entrepreneurs. What have you found has been most successful in terms of persuading people to get onboard with your idea?

AM: Two things. One is transparency, transparency really helps. It basically declares that you are not trying to go down a certain route that is shrouded in mystery; you are being transparent about where you think this can go and what the risks are, so you bring people along with you to understand the landscape.

The other piece on persuading and getting people to move and see where your vision is, is to have and cash in a little bit on your track record and to talk a little bit about: here is where I have actually seen this sort of stuff that we are doing succeed, and here is what we’ve seen it fail, and here are the learnings from that.

Persuasion to your point is critical and building. Over time building a relationship with people that allows you to have them on your side and move along with you. Even if they don’t see your full vision, to at least have trust and faith in you that you see it and you will deliver on it is critical.

EÜ: Yes, so find it really interesting that people who are entrepreneurs at heart or serial intrapreneurs, it seems like we do have a different skill set than folks who really want to go in and make something last over time. I know for myself, I’d much rather start things up than I would maintain them. For those of us who fall in that category and anyone listening as well, do you have tips for how we present ourselves? And we are applying for new jobs to launch something new in a new company, or how to interview well to really point out that we have this entrepreneurial skill that would work well in an employment setting?

AM: That’s a great question. My viewpoint on this would be for anyone applying for a new role (looking at an entrepreneurial framework), one is to actually come in and talk about the successes you’ve had overcoming challenges within an organization, and laying out the structure of how you’ve gone from zero to the state of where the business is sustainable or the service or product or whatever it is you are working on is sustainable.

The other big thing in my view of an entrepreneur and what makes one successful is not just starting the project and then midway washing the hands and moving off. There has to be a very clean handoff.

EÜ: That seems like a great way to mitigate any concern that, “Oh, I see you’ve had several different jobs over the last 10 years. Why don’t you stay put?” “Oh, no, I’m actually, I’m building the exact same skill set and I’m building success for all the companies that I’ve worked with and here is the way that I’ve managed to hand this off in a successful way to the team that isn’t taking it over.” That’s really great advice.

That is so inspiring and this has been just a great conversation. In the meantime I can’t wait to hear what new and exciting things you are launching. Thanks so much for joining us on the show today.

AM: Thank you very much.

EÜ: All right. We are going to finish up with our question countdown, which is five quick questions and five quick answers. Are you ready?

AM: I am ready.

EÜ: All right, so to start off, what business book or idea has made the biggest impact on your life and why?

AM: I think the one that actually I read years ago, which I still look up from time to time is a book by Jim Collins called, Good to Great.

EÜ: Classic. Next, what’s the one thing you can’t live without?

AM: It has to be coffee. It has to be coffee because that is something that at some level my day does not start without it, but I would be remiss to say, I’m also very much inspired and grounded by my family. I think those two things go together, but my morning starts with coffee.

EÜ: No doubt, no doubt. What’s the most useful app on your phone right now?

AM: I’m not saying this because I work here, but I am actually, I use the Venmo app probably daily. There is no instance where you are not sending somebody or receiving money from somebody for something that you have done in your social life. I probably find myself on that app way too much. Now I may have to check to see if I’m giving away more than I’m receiving, but I definitely on that quite a bit.

EÜ: I didn’t even notice PayPal owned Venmo.

AM: We do. We do.

EÜ: Next, in one sentence what’s the greatest lesson you’ve learnt throughout your small business or intrapreneurial journey?

AM: The one lesson is you do not have the time to make everyone’s mistakes, and that you should start building and networking and leveraging people in their learnings as fast as possible, versus trying to do all the things that are known to not work by yourself. Of course, you have to break the mold, but to me that’s a very critical piece.

EÜ: Wow, we could do an entire show just on that. We might have to have you back. Finally, what skill do you want to enhance this year?

AM: I think it’s a skill set that I have been trying to enhance for a number of years, and every year I keep staying focused on it, and that is around listening more. Listening more to your customer, listening more to your employees, listening more to the market, and just really not spending as much time giving out information versus receiving it.

EÜ: Wow, I think that’s a challenge in so many aspects of our life, not just in our careers. Thank you so much again, this has been a great conversation. Wow, there is so many things that we’ve just talked about that I would love to spend a whole hour digging into those topics as well. This has been great. Thanks again for joining us.

AM: It was great chatting with you. Thank you.

EÜ: That was Amit Mathradas, General Manager and Head of Small Business North America at PayPal. Thank you for listening to Xero Gravity. Make sure you join us next week as we’ll be joined by Kelley Cheng, founder and creative director at The Press Room. Kelley is a serial creative who’s going to drop by to talk about the role of perseverance, and turning your passion into a successful business. So have a great week, and we’ll catch you then!

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