Donations and words of support for the Black community flooded in from tech companies for the past few weeks following the killing of George Floyd by police. The largest commitment from the industry came from PayPal, which said it will invest $500 million in Black and minority businesses and give away $30 million.
The funding is a continuation of how PayPal CEO Dan Schulman has run the digital payments business for the past five years, with the company repeatedly pushing to support minorities, even amid heavy criticism and controversy when doing so.
In 2016, Schulman opted to pull out of a 400-person operations center in North Carolina, after the state passed an anti-transgender law. He received death threats. Two years later, his company banned the social site Gab for hosting anti-Semitic posts, as part of a purge of far-right groups and figures. The decision on Gab made Schulman a target of criticism on the neo-Nazi website Daily Stormer.
Rather than being dissuaded by these threats, Schulman said he wants to push much further. He said the new funding is PayPal's way of attacking systemic racism, using its venture capital money to counteract the persistent difficulty Black-owned businesses face in gaining loans and investments.
"You need to do more than just condemn racism, you need to be … anti-racist," Schulman said in an interview with CNET late last month. "And what anti-racist means to us, at least, is that you have to be part of the fight. You need to stand up and be involved."
PayPal's work is part of a burgeoning movement in the US to show support for the Black community and take down racist symbols that have long remained in the country. In June, NASCAR banned the Confederate flag at its events, the Aunt Jemima brand was sunset and statues of Confederate leaders have been removed in several US cities.
The tech industry is now again reckoning with its failure to diversify its workforce, even after repeated efforts to do so. To confront these issues, Apple announced the new $100 million Racial Equity and Justice Initiative, Netflix CEO Reed Hastings will donate $120 million to historically Black colleges and universities, and companies including Amazon, Google and Verizon are donating millions of dollars.
"It's important, it's positive," Rev. Jesse Jackson Sr. said in an interview of all the new funding. He cautioned that companies giving to Black causes for the first time should partner with nonprofits with track records so they can make the biggest impact. PayPal did that by teaming up with the Association for Enterprise Opportunity and several other organizations.
Jackson, a long-time civil rights activist who founded the Rainbow PUSH Coalition nonprofit, said he's most interested in funding that goes to strengthening Black institutions, including businesses and schools.
Schulman said he hopes his company's new funding will inspire some lasting change, even after the recent wave of George Floyd marches ends.
Here is CNET's interview with Schulman, which was edited for length and some clarification:
CNET: Why get involved in these political issues? You got death threats after North Carolina. Is this backlash worth it?
Schulman: Well, my mom asked me the same question after I got all of those death threats. And you know what I told her, and what we talked about inside the company, is that values are fundamental to how somebody defines themselves, how a company defines themselves. And so you have to act on your values. Values can't just be words on a wall. Otherwise they're just propaganda. You have to live them, you have to act them out. And you have to demonstrate them visibly.
Tell me about the investment fund.
We spent a lot of time post the tragic death of George Floyd talking inside the company, because, like the rest of the country, it unleashed a torrent of emotion. You know, despair and also determination. And this was throughout our company but most acutely felt by our Black colleagues. We spoke to Black leaders across the country to think about how might we respond, because obviously we responded right away by condemning any acts of overt systemic racism, but I think you need to do more than just condemn racism.
And so we announced that we were supporting this movement against systemic racism, really focused on trying to do something that we distinctively could help, which is looking at what the racial wealth gap is. And the racial wealth gap today is basically the same as it was back in the last civil rights movement in the late 1960s. So there really is no improvement. And so we decided to make a major commitment, $530 million. Some of it more short term-oriented, but we also put in place a very substantial amount of money to help over the long term, because at some point, the marches start to fade away, but the problem still exists.
How quickly will that money be invested?
I'll talk about just how quickly the first $30 million went. Ten million of that was grants that we were going to give to Black-owned businesses, because of Black-owned businesses over the last three months during COVID-19, some 41% of them have gone out of business. That's double the rate of all other small businesses. And, as you probably know, Black-owned businesses also have a much more difficult time getting traditional lending. Even during good times, the amount of financing they can raise, whether it be equity financing or just loans, is much lower than the national average. But in this time, it's practically impossible for them to get a loan. These aren't loans, these are grants to Black-owned small businesses that need cash now; it's just a matter of survival for them.
From the time we announced this to the time that money will be flowing, from that $10 million -- and we've had over 55,000 applications -- will be less than two weeks. That $500 million doesn't have a timeframe, we're not saying that'll be over the next five years, or one year, but we want to start moving on it ASAP.
Do you think things are different this time? Do you think that enough attention will go to recruiting and retaining Black workers, engineers and managers?
Is this a moment or is this a movement? And I think that is something that I've been talking to a lot of Black leaders about across the country. That's why I think it's really important that these aren't just one-time grants that are given. That these are multiyear commitments, and I'm seeing some companies step up to multiyear commitments. Here's the interesting thing -- and it's the reason why diversity and inclusion is the top value at PayPal -- when you have a more diverse workforce, you perform better. I don't know what percentage of the US was white male, but if that's all the pool that you're fishing in for great talent, you're missing out on so much incredible talent in the marketplace. I think we have a long way to go as every single company does because I think this is an ongoing thing, but right now today, PayPal is 57% diverse, our VP and above is 54% diverse.
So do you think this is a moment or a movement?
I think, for whatever reason, and maybe it's also because we live in this time of COVID-19, where people are more reflective, spending more time at home, like you and I are, they're thinking about things, probably in a more deep fashion than before, like where is the meaning of different things. And this is tapping into the consciousness of the country. When I look at the diversity of protesters, that's encouraging to me as well. And I think the key is to take advantage of this moment, whether it be nonprofits, organizations that fight for social justice, and the private sector to really step up, because I think things need to start tipping and then they hit a tipping point and then they keep moving.
How is PayPal making sure that unbanked and lower-income people, many of whom are minorities, aren't left out of the new digital economy?
Look, there was an economic crisis that was going on well before COVID-19, having  million adults in the US struggle to make ends meet at the end of the month before COVID-19, [40%] of Americans have less than $400 of savings. And those who are underserved by the traditional financial system, that's something like 70 million adults, they spend about 10% of their disposable income on what I would consider to be unnecessarily high fees and high interest rates. And that last year was something like $160 billion that they spent. That is astonishing to me. You can do things at half that cost, maybe 20% of that cost if you do them electronically.
And what I think is going to happen over time is that everybody will eventually have a mobile phone, and in fact mobile phones are disproportionately penetrated in lower-income populations. Why is that? Because it's the only device that they use, they don't have desktops or iPads, they can't afford that, but they can afford a mobile phone. And a mobile phone gives you all the power of a bank branch in the palm of your hands. This isn't the only solution to financial inclusion and helping financial wealth creation. But it is a big step.