NOEL: Hello and welcome to Episode 71 of the Tech Done Right podcast, Table XI's podcast about building better software, careers, companies, and communities. I'm Noel Rappin.

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Today on the show, we have Mike Todasco, the Senior Director of Innovation at PayPal. We talk about what innovation means at a company and how to encourage innovation both if you are a PayPal sized company and if you aren't. Mike also shares some information about PayPal's internal innovation tournament and how they offer incentives for innovation. And now, here's the show.

Mike, what do you do?

MIKE: Yeah, Noel. Thanks for having me. I am the Senior Director of Innovation at PayPal.

NOEL: Okay. And what does the Senior Director of Innovation do? What are the kinds of things that you are overseeing there?

MIKE: Well, innovate is the short answer to that I guess, but no. So, we do a lot of fun and exciting things here. They give a little bit of context for everybody. So for the PayPal, Inc family of companies, I'm largely responsible for encouraging, distributing, influencing, doing whatever I can to make sure the 20,000 plus employees that we have at our company are being more innovative, coming up with better ideas, learning about the next generation of products and many more experiences beyond that. So, those are the types of things I focus on. So again, more better ideas and then actually doing things with those ideas, building stuff and so forth. That's it at a high level.

NOEL: There's a couple of different things I want to ask. The first one is what kinds of things are happening at PayPal that made them think we need to have somebody who is specifically in charge of innovation and making sure that we innovate.

MIKE:	It is fairly standard in technology companies to have this type of role. So, the thing that's actually unique about PayPal is how small the team is. I think in most, we're a company approaching within the next year or so nearly $20 billion in annualized revenue. We're a big tech company. But if you actually look at the innovation groups or the R & D groups of most fintech or technology companies, they're much larger than even what we have. So, when we split from eBay in 2015, we felt that we needed to do innovation and frankly do innovation the PayPal way. We had always been a very innovative company. We were the ones who in many ways so much of the online commerce and the mobile commerce that is really revolutionizing our lives and our world. A lot of that started back 20 years ago when we were founded as a company and we've continued to innovate over time. And so, when we were becoming our own separate entity again and we had our spin off from eBay, there was a brand new opportunity for us to relook at this and to create this frankly one person innovation team that I am here at PayPal to even further pour fuel on the fire, if you will, on all of the innovation activities. The hackathons, the side projects, all of these things that are already happening sort of institutionalized it a little bit more and just encouraged it even more so within our company.

NOEL: You mentioned a term that sort of contextualized this a little bit from you, which is when you made the analogy to a research department. I actually spent a summer interning in the research department at Apple a million years ago when they had a research department, an educational research department. I'm sure they do all kinds of research at the moment. But this specific group doesn't exist anymore. That's a digression. When I think of a company having a research department like that, I think of things that are often not usable or not used by the larger company, like things that are impractical or outside the scope to some extent or our company not taking advantage of it. Is the innovation tag away of trying to make those things more concrete and more directly relevant to what the company needs?

MIKE:	I don't know. I almost used the two things interchangeably. And one of the things that we believe at PayPal is that everyone can innovate and that we are all innovators at this company and we need to all be, because frankly if I am the only person in the company that is innovating, that we're going to fail as a company. And I think a lot of companies might put more of the onus of innovation on those innovation or R & D teams. But at our company, it's the responsibility of the delivery teams and every other one of our 20,000 employees that we have at our company today. So, when a team comes to me and says, "Mike, we are really passionate about something like let's just say augmented reality. And we think that there is a really interesting solution that we can build out as a company. We need some help and guidance in how to do this. How can you as part of the innovation lab help us out?" These are types of questions I get all the time. And again, these people, they'd probably still have their day jobs. They're working on one of the host of different PayPal products by day and in almost a 20% time fashion that they would be taking on these other tasks as well, sometimes with our assistance and sometimes without. There's no rule within PayPal that says things have to go through the innovation lab. We're just here to help frankly. But one of the things that we do/say within here is like whatever it is that you're building out doesn't have to have anything to do with PayPal. So, this is getting to your question about like kind of your more traditional research teams. Especially if you are just starting in something and building on a new technology where you don't know what is even really feasible with this technology. We don't want to be limiting the solutions set of what you can do.

I'll give a great example. In the past few years, we've been starting to look at some technology with robots. And so we have robots at several of our innovation labs that we have around the globe and there are teams that are building experiences within that. And no way were we saying to those teams, the only way that you're going to get a robot or be able to build on it is if you're making payments experience x, y, and z. You need to just learn. You need to experiment. You need to play with that.

NOEL: You're not expecting them to have the payment bot?

MIKE:	No. Step one of robots is to do no harm and to not kill anybody. So yeah, we have a wheeled robot. The first thing is how do you not run anybody over? We'll worry about the payment stuff later. And look, I mean, we joke here as part of this, but in reality people are already spending 40 plus hours per week thinking about payments, working with our own APIs and working with our services and our customers. So, PayPal people are already thinking about payments and financial services. We don't need to force them to do that, no doubt, as these things evolve. There is probably going to be payment things that will morph into them in some way. And if not, maybe they're also going to find completely new businesses that we would never have considered before.

NOEL: Do people come to you for assistance and guidance, I suppose? What does that kind of look like? What do you actually provide to somebody? Let's say I came to you and I said, "I'd really like a robot," or, "I'm really interested in VR." What would happen then?

MIKE:	Luckily, in both of those areas, and let's just talk about VR for a little bit. We've had teams already within PayPal build experiences within VR as prototypes within the company. So we would have an existing knowledge base that would be out there already. We would probably start by pointing you to that, to kind of familiarize yourself with, "Hey, these are the kinds of things people have already thought of. Here's some contact people. Here's some slack channels that you can follow as part of this." Like, get yourself immersed in what has been done, what can be done. Get yourself into the conversation.

NOEL: You're trying to prevent people on different teams or in different continents from like doing the same thing without communicating with each other.

MIKE:	Yeah. We at least want them to be aware of that. I mean, you could have two different teams building similar experiences, but we want them to learn from each other as part of this process. We try to make these things as collaborative as possible. When we started this whole concept, it was in the world of augmented reality. And we called it like a six month collaborative hackathon where we were going from zero to something in AR and we had teams building in ARKit, ARCore, HoloLens, a whole bunch of different platforms and they were learning from each other. We were just able to get so much done quicker when a certain team was dealing with an issue, say in HoloLens, there was another team potentially on the other side of the world who had a similar problem and they were able to collaborate even though maybe the solutions that they were building out were completely different. But it is a way to get everybody in the company up to speed in a faster and much more collaborative way.

But ultimately, to answer your original question, it is up to the team themselves. If you have a vision of a cool VR experience that you want to prototype within our company, the only requirement that I ask is if you could find a team of people who are willing to join you on whatever crazy vision that you have. That's all the proof that I need that that's something that I want to support. If you can convince others that, "Hey, you should be spending time on your nights and weekends. You can sacrifice watching all those amazing new shows. They're going to start on Disney plus soon enough. This is something that you want to work on." Well, that's proof to me that this is something that we should explore further.

NOEL: Let's say somebody is listening to this and thinking, "I would really like for my company to be more open to innovation, to people doing innovation within the company," or whatever. What would you recommend? What kinds of things does a company need to do in its culture and in its structure to really encourage everybody to feel like they can be an innovator?

MIKE:	This has been a journey. I've been in this role here at PayPal for over three and a half years and even more time at the company before that, and we already had this culture of innovation at PayPal when I started. It wasn't something that I necessarily built from the ground up. Like I said, it was just more igniting. It's just trying to even have more of this happen within the company. With your question, let's take it where you're a smaller company, you may have some traditional product lines, you're looking at the next thing that's important. You want to drive more innovation in the company. There are so many paths and tips I could give, but I think the one that I would put out there in front of everything else is just an openness to take risks. And frankly, you need to do that from the top by showing that failing and making mistakes is part of the process. So, within our innovation lab, if every project that we're working on is succeeding, if everything goes swimmingly and perfectly well, that means we're not trying hard enough. We're not extending ourselves enough. And that's true for all innovation. If you're in a company where you have an all hands or communications with your teams and you are only communicating the swimmingly wonderful things that are happening within the company and you're not communicating any of the bad, that's going to be teaching your employee base that you can't make mistakes. Versus if you are the CEO and the CEO gets up there on stage and she communicates to the rest of the organization, "Hey, we've done these two things and let me tell you about this sales call that I was on that I really blew this past week," and spends five minutes of an all-hands event talking about that. That says something to the rest of the company that, "Hey, everybody makes mistakes. It's okay to take chances." And I think something like that will hopefully trickle down where others are going to be open to that and so forth. And that's one of the things that could just kind of get that innovation ball rolling.

NOEL: Yeah, that's interesting because we're a small consulting company, but our CEO does actually have a feature in all of our quarterly all-hands where he talks about his three biggest mistakes over the previous quarter with exactly kind of that goal in mind.

MIKE:	It's so important. And look, I think that's a rarity, unfortunately, in most worlds. I think I don't know if it's that leaders are by nature insecure and they feel that if they expose themselves to saying like, "Well, I'm not perfect," then the teams are going to think less of them, but it's exactly the opposite to that. As a leader, I think you need to show those vulnerabilities. You need to show others that you are not perfect because if everybody thinks that perfection is what they need to strive for, then they're not going to be willing to take any chances that might show them to be imperfect in any way, which means that they are not willing to sacrifice any of their own time to do any true innovation.

NOEL: Yeah, I think that becomes an issue in technology teams where it prevents newer members of the team from learning because they're unwilling to ask questions or show that they're not perfect. And as a result, they just quietly stew. And I think that's analogous to what you're talking about.

MIKE:	Yeah, and it can start with baby steps. Maybe you don't start with doing this at the all-hands meeting, and maybe you don't have an all-hands in your company. Maybe you're just somebody who runs a team or something like that. But you can start by just being vulnerable to your team by saying, "Hey, I don't know the answer to something very simple. Can you explain it to me?" Show those vulnerabilities in meetings. Ask the questions that maybe you might actually even feel embarrassed to ask in some way. But by doing those kinds of things, it's going to start a much more collaborative, inquisitive, and hopefully, innovative culture within that team or within that company that you have.

NOEL: One thing that's really valuable on a team is when senior people are willing to ask questions and make themselves vulnerable and open themselves up as that being a behavior that's encouraged and rewarded within the team. What's something that you've tried to do to encourage innovation specifically that maybe didn't work? Not an innovation that didn't work, but something that you tried to do to help your team innovate that maybe didn't have the effect that you wanted?

MIKE:	Wow! So many. So, so many things to go through here. As I think of a good one, let me even just give you a little bit of the mentality. Through our innovation lab that we have here at our headquarters in San Jose, I host a lot of different events and things like that. So, we will do everything from have speakers to come in to have brainstorm sessions, educational programs. Like I want to expose people to the best ideas from world class thinkers from all around the world. And most are vastly outside of the realm of fintech, which is where we deal with day in and day out. And the one thing that immediately jumps out to me are some of the events that I have held where literally no one shows up. That's the greatest style of like, "Okay, I thought this was going to be a home run but it wasn't." I'm just thinking of one, like I wanted to do a brainstorm and coloring session. I actually bought some crayons and colored pencils and coloring books and I'm like, "Hey, this is something a little bit different. We do a lot of brainstorming in here. I'll put on some music, let's go ahead and do this on a Friday afternoon." And literally, I was the only person in the room. Again, to put it in perspective, we had an author come in just a few days ago and we had a hundred plus people in attendance for that. So sometimes when you run something and literally zero people show up, that's the way of the market telling you, "Okay, while this might've seemed cool to you, it wasn't cool to the hundreds of other people that are on this distribution list that I sent out," and you just learn to pivot. And you can't take these things personally. And frankly, if I was not having any of these zero attendee type events, I would say I'm probably not trying hard enough with it. I'm not exploring enough new, different things. If every event was at least having some people show up, because I got to keep changing it up for the audience again and again.

NOEL: Yeah, you're not really exploring the boundary if you don't cross it every once in a while.

MIKE:	You got it. That's exactly right.

NOEL: I think that's true for a lot of technical topics. So, what are some things that you've done that have worked really well? Do you want to talk about the tournament now or do you want to...?

MIKE:	Yeah, I'd love to. This actually came from a brainstorm that we had with our interns last summer. We have intern summits and I got to host one of the rooms there and a whole group of interns were coming and were just saying, "What are ways PayPal could be more innovative?" This concept of a global innovation tournament was born in that session. Innovation tournaments are known. And what an innovation tournament is, is you have problem statements out there, you have people submit ideas from across the company and you have different rounds where the ideas get filtered down and expanded upon until you ultimately have a winner of the tournament. So, this was something that we begun earlier this year. We had nine executives from across the globe and we had those executives post questions to all of our employees that they were really interested in answers. They wanted a lot of different answers and perspectives to these questions that they and their orgs were struggling with. So, they ranged from 'how do we increase our growth rate of net new active customers by five times what it is today' to 'how do we use our products and services to more effectively help our customers fight climate change'. And it was everything in between. So as you can see, a really wide variety of problem statements that we had. We had these nine problem statements posted and then it was up to PayPals from around the globe to submit their answers to these questions. It was over 35 offices from around the globe submitted ideas and we had various filters on this. We actually had built an internal blockchain based token within PayPal called Wow. And this is a token that we use to reward innovation within the company. I'm happy to speak more about it later. But then we also use it as part of this tournament as a way to "invest" in the ideas. So the hundred ideas that raise the most investment basically made it to the next round of the tournament. And it was great and really exciting because then those people who submitted those ideas actually had investors who had a vested interest in seeing those ideas succeed.

NOEL: So, who the investors are? Are they PayPal employees?

MIKE:	Any employee, yes.

NOEL: So any employee has a certain amount of tokens that they can...

MIKE:	Yeah, every employee within PayPal gets started with some tokens. So just by being a PayPal employee, you get those. By doing innovative things like submitting ideas or even doing things we want to encourage like donating your time to our internal site called PayPal Gives, these will earn you more of those Wow, those tokens. And then you could invest in any of the ideas that were out there. So, it was really exciting to see people promote their ideas, to try to get people to invest their ideas and to just see people look through hundreds and hundreds of ideas to see which ones they wanted to support.

NOEL: Okay. So you wound up with a hundred ideas. These people now had investors to report to, I guess, to report progress to.

MIKE:	Yes.

NOEL: Do they get any other support from PayPal aside from knowing that people are excited by their idea?

MIKE:	Absolutely. So as it went through each round of the tournament. We went from 100 to 25 to 10 and eventually to the top three ideas, which will all be flown into PayPal for kind of the global event where they will get to present this on stage in front of all employees to senior leadership. But we're going through the various stages and we have a kind of a core global innovation team that's sponsoring this, that's giving mentorship, training, and guidance on each of the phases. The problem statement owners themselves are very much getting involved because, to go from a hundred ideas to 25, it was actually the problem statement owners who decided who were the ones that went to the next phase of the tournament by scoring those.

NOEL: How long was there between phases?

MIKE:	Between any given phase, it's probably three to four weeks, it kind of varies on the calendar. But roughly speaking, yeah, about that.

NOEL: So, enough time to prototype something.

MIKE:	Yeah. And it varies. Some are actually built like full fledge working prototypes. Some of the ideas, they're focused more on customer research. It all depends. And that's one of the great things. It depends on the problem statement put forth, what is the best thing to showcase in your solution, to the skill sets of the people on the teams. And again, the cool thing about this tournament as I look at the round of 25, the leads on this team run from what you would think to be more typical, your designers and engineers to ones that are not as "typical". I mean, we have an executive assistant who is leading one of these teams about an idea that she had, which is just awesome. And that's why when we say that everyone can innovate, we really mean it within our company. Their great ideas come from everywhere. And it's important when you're in a company, especially a company as long as yours, you can't just look to certain functional areas for those great ideas.

NOEL: So, this becomes a way to sort of cut across and through the hierarchy and also give people opportunities that they might not have on a day to day basis.

MIKE:	Hundred percent. That's exactly right. Say you're an engineer working on Venmo or something, but you have an amazing idea for PayPal in India, for example, where Venmo is not currently available, this gives you an outlet to do that because we had a specific problem statement related to our business in India. And this can give you exposure to that and give you direct access to a leader who is looking for interesting solutions to come from minds from across the business and across the globe.

NOEL: So, I think that strikes me as another thing that a company can do. We were just talking about modeling the behavior of being vulnerable and showing your mistakes, but also modeling the idea that people can grow and people can be interested in things that are outside of their functional or their immediate role. That seems like a great opportunity for an organization to promote innovation and growth internally.

MIKE:	Absolutely. And look, I started my career as an accountant. And most people probably do not think of accounting and innovation or dare if they do, they think of things like Enron, which are not the type of innovation that we want to think of.

[Laughter]

NOEL: Technically, that is an accounting innovation, yes.

MIKE:	You got it, yeah. I love to tell this story about myself. I'm not an engineer, I'm not a traditional person in this type of role. And frankly, a lot of people I know in innovation type roles, I don't want to say have similar backgrounds to me, but I have backgrounds that most people would not perceive to be a linear path towards innovation because so much of innovation comes through trial and error, getting exposed to all of these different ideas that are out there and then applying them to things in different ways that other people wouldn't have seen. And if you've just had a role where you've just gone from a level one engineer to a level two and three and so on and so forth, you maybe don't have as broad of an experience that can really drive that innovation. And that's why even within the company, we tried to expose people to different ideas, to different types of projects, to give them opportunities to do things on these innovation teams that are different from their day job, to explore what it's like to maybe be a product manager instead or do the actual internal launch or get in deep with customer research because that is just going to make you more holistically strong as a business person and an innovator.

NOEL: Do you find people using that as an opportunity to shift their career?

MIKE: Hundred percent, yeah. We do see it all the time and it's great because it gives them a chance to try things out. So when we were building Wow, the blockchain based innovation token platform that I mentioned before, we had so many different roles on that team. And I would say almost all the people who are working on this in their spare time were doing things that were largely outside of their expertise and their day job. And look, did that mean that it took us a little bit longer to build this? Probably. But did that also mean that we had all these fresh perspectives, these different ways to look at it, even just different ways to potentially scale out this product that we might not have thought of otherwise? I mean, to build this product where, "Hey, maybe one day we would actually use these to invest in people's ideas." That came from these really interesting brainstorm discussions where people were throwing these ideas and thoughts together and saying, "Maybe we could do that one day." Well then how do we build out the functionality now so we could eventually support something like that?

NOEL: You wanted to talk a little bit more about these innovation tokens. This seems like sort of very specific to PayPal kind of thing, that you actually have an internal currency for innovation. How did you get to doing that? Where does that come from?

MIKE: It literally came from a brainstorm session from within our innovation lab just talking about how do we reward and incentivize innovation in this company more effectively than what we are already doing. And that evolved into this discussion where we were saying we can use blockchain for that and then we can actually have this as a token where people can earn these tokens by doing innovative stuff within the company. They could then have a P2P-like functionality that everybody in the company can see. As I've said before, Venmo is a PayPal company and so we have a very Venmo like feeds. So if you're on the employee network, you can see all the transactions going, all the ways people are earning these, redeeming these, and sending these tokens to each other. And then finally we could put forth some really cool experiences for people to redeem them. A kind of once in a lifetime type of opportunities that range from doing Krav Maga with our CEO, who is a very active person who I would never want to meet in a dark alley. Literally, to spar with the CEO one morning to attending box seats at San Jose Sharks game with our leaders to playing sports with people to actually having our CTO Sri Shivananda come to your house and set up your home network and smart speaker system for you. He is the most overqualified technical support that you could possibly have, but Sri was kind enough to volunteer that as an experience. It's just a whole bunch of things in between. And it's something where employees could really get excited about this, see kind of a different perspective of a lot of our senior leaders within the company, and give everybody something to kind of strive for.

NOEL: Yeah, that does sounds really interesting. It does very much sound like a big company solution to a problem, which is great. I mean, you're a big company. It is appropriate that you would have a big company solution to a problem. I was wondering if you had any ideas about what kind of steps a company might want to do if they wanted to have that kind of internal economy but didn't necessarily have all those resources to throw at it.

MIKE: If you're a smaller company who want to do something like this, you can do it through Google docs or whatever internal tool that you have. Again, we have 20,000 plus employees, so this is something that needs to scale. It needs to be behind our firewall, all this other kind of stuff. But if you're a small five, 10-person company, there are a lot of creative ways that you could take these same sort of concepts and apply it just using off the shelf tools. You don't need to be a programmer to do that. If you had a couple of shared spreadsheets and maybe you can even, just for fun if you have a lobby or something, you could track all of this and have like a winner circle where every month, you're going to show who's earning the most points or something like that and do something for your teams. But ultimately, you have to do something that I think is reflective of the culture that you are in your company now and frankly also who you want to become as part of your company culture. And by taking some of the basic principles that I laid out here with what we've done with Wow, I think it's applicable to any type of organization, big or small.

NOEL: What, in sort of the general range of technology, what kinds of innovations do you find interesting? What are people coming to you and are excited by and what kinds of things are you sort of looking for people to innovate within?

MIKE: I would really say the types of innovation that get me most excited today, just from a pure technology standpoint, would be related to things like machine learning and artificial intelligence. There are a lot of amazing things going on within this company and outside the walls of PayPal that are really mind boggling. Just the types of things that we can do today that we might be able to do to secure your accounts, to keep the bad guys away. And that's a lot of what we do as company. We want to know that you are you so that a bad guy posing as you is unable to buy something and have it sent to them and so forth. That's what we try and do largely within our network. So, those kinds of tools get me really excited. But also, to get away from technology, I love nothing more than somebody who comes to me with an idea or a business concept that is just so simple and elegant that is just going to drive behavior in a way that I never thought of before. I love nothing more than to be surprised. And again, to have somebody pitch something to me and say, "Hey Mike, have you ever thought about doing this?" And that whatever comes out of their mouth is in a completely different direction than what I expected it to be. And then to be able to brainstorm and build off of that and then to have some new product or service evolve from this simple conversation that might not be necessarily using technology or new types of technology but using existing technology in a brand new way.

NOEL: Cool. It all sounds great. We're sort of coming up on time here. Where can people find you online if they want to talk to you some more and where can they learn more about innovation at PayPal?

MIKE: Absolutely. So if you want to reach out to me, I am @Todasco on Twitter and I think LinkedIn is just Todasco as well. If you want to email me, feel free, shoot me a note. I'm just mt@PayPal.com if you want to reach out to me directly. And if you want to learn more about PayPal innovation, all this stuff we're doing, just checkout PayPal.com. You're going to be able to find a whole bunch of different stuff there.

NOEL: Mike, thank you so much for being on the show. I really appreciated the opportunity to speak to you.

MIKE: It was a lot of fun. Thanks for having me.

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Tech Done Right is hosted by me, Noel Rappin. Our editor is Mandy Moore. You can find us on Twitter @NoelRap and @TheRubyRep.

Tech Done Right is produced by Table XI. Table XI is a custom design and software company in Chicago. We've been named one of Inc. Magazine's best workplaces and we are a top rated custom software company on clutch.co. You can learn more about working with or working for Table XI at TableXI.com or follow us on Twitter @TableXI. We'll be back in a couple of weeks with the next episode of Tech Done Right.