How PayPal Got Its Swagger Back

PayPal CTO explains how the move to OpenStack and a more agile development process put the mojo back in PayPal's product line.

Charles Babcock, Editor at Large, Cloud

November 15, 2013

4 Min Read

Although Barrese himself is youthful looking, he's no recent college grad. The father of three has done a tour of duty with the Army Signal Corps, spent five years at Andersen Consulting, served for three years as VP of engineering at Charitableway, and started as an e-commerce architect for eBay in 2001. At parent company eBay, Barrese rose rapidly through the ranks. He has served as director of architecture; senior director for systems engineering; VP of architecture, platform, and systems; and VP of technology, before being tapped to become VP of global product development for PayPal in 2011.

He became CTO of PayPal in 2012 and last month was named senior VP and CTO. In his own transformation, he's seen the need for maturing companies to also transform themselves and regain the agility they enjoyed in their youth. Describing his own advancement as closely tied to that goal, Barrese proceeds as if fearless of change because, as Barrese himself conceded, PayPal IT had become hide-bound enough "to drive away the innovators."

In fact, change still doesn't come easily at PayPal, including the change to cloud computing. In a panel at the OpenStack Summit in Hong Kong on November 5, Yuriy Brodskiy, PayPal's senior manager of cloud engineering and infrastructure, told an audience that the biggest problem in getting to the cloud is not the technology but the organization. Members of server, network, and storage teams need to start thinking about all three, he said, "crossing boundaries that were previously well defined. There's a lot of unknowns, a lot confusion," he added. "It's somewhat uncomfortable for a lot of people."

But PayPal has converted 20 percent of its datacenter into a private OpenStack cloud, with product teams able to self-provision and move quickly toward a prototype.

It's clear that Barrese has the personality to weather these difficulties. A skilled technologist, he is always above the fray, with a laugh that verges on a high-pitched giggle as he recounts some event that set off a chain of unforeseen consequences. It seems as if a little chaos around him is a source of amusement rather than dismay. Barrese knows that he must be the author of change at PayPal and appears to have decided that the best approach is to change the conditions. The OpenStack cloud, Node.js language, and other new tools are all part of the evolution.

Many inside PayPal welcome these changes as the best antidote to the rapidly changing electronic payments industry. Scarcely a week goes by without some new payments vendor arriving on the scene. Google has even developed its own payment system, Google Wallet.

Square, the payment startup co-founded and headed by Twitter's Jack Dorsey, is in discussions with banks about an initial public offering that would give it the means to compete with PayPal. Its sales are approaching $1 billion, according to the Wall Street Journal. PaySimple, Pay It Green, GoDirect, BitCoin, and host of other services want to slow down PayPal's gains. (eBay added 5 million new accounts in the third quarter; 78 percent of them will pay eBay transactions through PayPal.)

But PayPal now sees both the challenge and the opportunity. Instead of having a team that's oriented toward mobile development, all development is now centered around "mobile first" -- hence the use of Node.js. A Node.js application can be written once and rejiggered on the fly for each device user interface it's trying to reach.

PayPal used to be about simply making electronic payments from PCs to established e-commerce systems. Under Barrese, it's migrating out to the edge of the network, accompanying consumers to where they make spot purchases. Thirty-six percent of new customers in PayPal's third quarter came from the ranks of mobile users. Barrese wants to see that number increase.

PayPal is trying to restructure on three fronts simultaneously: It's trying to reorganize IT, make its datacenter infrastructure more flexible, and rapidly update its digital product line. Under Barrese, the company's progress on the first two will ensure that the third happens as well.

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About the Author(s)

Charles Babcock

Editor at Large, Cloud

Charles Babcock is an editor-at-large for InformationWeek and author of Management Strategies for the Cloud Revolution, a McGraw-Hill book. He is the former editor-in-chief of Digital News, former software editor of Computerworld and former technology editor of Interactive Week. He is a graduate of Syracuse University where he obtained a bachelor's degree in journalism. He joined the publication in 2003.

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