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Scott Thompson's abrupt departure as PayPal's president leaves PayPal in the hands of a team of competent executives, but raises the question of who among them, if any, will be tapped to fill his role.
January 19
As Don Kingsborough watched the mechanical bears sing and dance on a Disneyland stage, it's safe to say visions of alternative payment systems weren't exactly dancing through his head.
For one thing, it was the Eighties. Lengths of wire tethered most phones to kitchen walls, NFC immediately meant the National Football Conference, and Diners Club stickers were a lot more visible.
But the Country Bear Jamboree set Kingsborough, now 64, on the path that eventually led to his current job as PayPal's vice president of retail and prepaid products. It was a Disney executive that brought Kingsborough, a veteran of the video game industry, out of early retirement to license the dancing bears for sale in retail stores, the end result being Teddy Ruxpin, a popular talking teddy bear akin to the modern Tickle Me Elmo.
Fast-forward a couple of decades, and Kingsborough's role at PayPal is quite similar to the one he performed for Disney: turn an unconventional product, in this case PayPal, into a hit in retail stores.
"The reason I came here is because I had a vision for the consumer, what the consumer wanted," Kingsborough says.
That vision has carried him through leadership roles at companies such as Atari and most recently the BlackHawk Network, a prepaid gift card company he headed before moving to his current role at PayPal. He also had a role in bringing Japan's Famicom to the United States, where it rekindled interest in video games after being rebranded as the Nintendo Entertainment System.
These weren't all success stories. Kingsborough's tenure at Atari ended with the video game crash of 1983, during which the company had to bury a massive number of unsold games as the nation fell out of love with home game consoles.
"I was definitely ready for a break," Kingsborough says. "I had worked, towards the end of the selling of Atari, almost 24 hours a day for eight or nine days in a row."
Kingsborough spent the next three months sitting on a beach in Hawaii, where he says his biggest responsibility was deciding whether to wear shoes.
He was called back into the business world after a phone call from a Disney executive who used to work at Warner Communications, which owned Atari. A few days after getting that call, Kingsborough found himself staring in awe at the dancing bears.
"They turned this thing on, and the bears would talk," he says. "I was really taken by it."
He bought the license for the bears from Disney for $20,000. At the toy maker Worlds of Wonder, Kingsborough also saw the potential to revive the video game industry, and struck up a distribution relationship with Nintendo.
"If you look at all of these — Atari, Nintendo, Teddy Ruxpin, gift cards/BlackHawk — I saw where the markets were going," he says.
He knows where the payments industry is going too, he says. And PayPal already has the scale to make the most of the trends he sees.
The payments unit of eBay Inc., PayPal is attempting to blend its online accounts with offline spending, creating a new payment network to challenge the likes of Visa Inc. and MasterCard Inc. on their home turf.
PayPal has made long strides toward achieving that goal. Last month, it revealed that it is testing a point of sale payment system with Home Depot. PayPal is also working with the world's largest payment terminal makers, Ingenico SA and VeriFone Systems Inc., to support its point of sale efforts.
PayPal customers today can request a plastic card to use in the Home Depot stores that are participating in its test, but the card is just one access point for this payment system. Users can choose to instead enter a phone number and PIN to spend from their PayPal accounts. PayPal plans to add a rewards feature by the end of this year.
"PayPal, from its founding in the late 90s until now, has lived almost entirely in the online world, and all the expertise they developed has to do with online payments," says Wedbush analyst Gil B. Luria. "Bringing somebody who has the physical retail experience [and] has had success with prepaid products … adds a very important perspective to that management team."
Kingsborough joined PayPal in March 2011. From June to December he flew some 94,000 miles domestically, by his own estimate, to personally help establish the point of sale payment system PayPal is testing today.
In his travels, Kingsborough says he is chasing the "wow" factor that made Teddy Ruxpin a success.
To describe the "wow" factor, Kingsborough likes to recall an incident in September 1984 that he witnessed at a J.C Penney Co. Inc. store in Concord, Calif.
At the store, Kingsborough was removing a Teddy Ruxpin toy from a display, and a little girl that was watching him was instantly captivated by the toy. Kingsborough says he sensed that the toy would be a success when the girl's mother immediately demanded to know how to buy a Teddy Ruxpin of their own.
When PayPal comes to more stores, it could create the same enchantment among shoppers, Kingsborough says.
But for PayPal to succeed in this new territory, it has to be simple and widespread — and it has to get to cash registers faster than any rival alternative payment system.
"Ubiquity has to occur very quickly," Kingsborough says. "If you don't do that, I don't think you fail, but you certainly don't succeed. You don't become the dominant player."
