PayPal Acquires Mobile Commerce Company

By Sam Gopal | 20 Aug 2015

PayPal has made its first acquisition since it became a standalone public company, with the purchase of mobile commerce platform Modest.

Following its spin off from eBay, digital payments giant PayPal announced yesterday that it was purchasing Modest, a Chicago start-up that builds mobile e-commerce applications for small businesses.  Details of the agreement have not been disclosed, but the acquisition will see all 20 Modest employees join PayPal’s Braintree subsidiary in Chicago.

Modest was started by Harper Reed and Dylan Richard. Reed is known for being the Chief Technology Officer for President Obama’s 2012 re-election campaign, and Richard was the lead engineer for the campaign. Both bring experience in contextual commerce, a hot topic given social media networks are evolving from places where people share and discover new things to places where they buy the things they find, at the moment of discovery.

Modest launched at the beginning of the year and currently helps only a handful of merchants create mobile apps for their stores.  This deal will place the company’s offerings in front of thousands of PayPal merchants.

“E-commerce is a tried and true way to make money on the internet and yet it’s so untapped in various aspects of our lives,” said Reed. “We want to create commerce where commerce doesn’t yet exists. Think of it like putting a buy button where a buy button belongs, but where they haven’t gone yet.”

This statement by Bill Ready, Senior Vice President, Global Head of Merchant and Next-Generation Commerce, PayPal, was available on the PayPal blog:

“At PayPal we are always striving to innovate commerce experiences and make them better for both merchants and shoppers. Today, we’re excited to take another big step in this direction as we have agreed to acquire Modest. Modest allows merchants to offer an end-to-end experience that makes selling on any platform easier and simpler. They have built exceptional mobile technology and bring deep talent in contextual commerce to PayPal.

“Contextual commerce is an exciting opportunity for PayPal, representing a new frontier for commerce that is rapidly growing. The acquisition of Modest will help us do amazing things in this area, faster than ever before. For merchants, this means PayPal will be able to offer a complete commerce solution (payments and order management) to help them add contextual commerce channels to the ways that they sell to their customers.  For consumers it will mean seamless, simpler, and safer ways to buy the things they want, anywhere they discover them.”

Modest will be part of PayPal’s Braintree business, which manages and processes payments for companies like ride sharing giant Uber. Braintree was absorbed by PayPal in 2013 for $800 million, and is helping to power buyable pins on mobile devices, allowing Pinterest users to shop from retailers like Nordstrom and Neiman Marcus directly from the social media platform.

The companies suggest a good fit given Modest can build apps with one-touch purchasing and add buy buttons to emails. Modest’s technology will also bring additional commerce expertise to PayPal beyond just payments, including shipping and inventory management.

Reed says it remains unclear what Modest features or services will be integrated into PayPal’s Braintree platform and the next few months will determine if PayPal bought Modest for its product features, or simply wanted the team in an acqui-hire. But Reed still sees great value in the sale of Modest, telling VentureBeat in an interview that both he and his cofounder had a set of goals when they founded Modest: “This won’t be any fun if we’re not able to scale. If we can build a great product, but can’t push this out to millions, then it’s boring…we found this amazing cheat code to get to scale.”

Many social networks, including Facebook, Pinterest, and Twitter are embedding buy buttons on their sites that let people to buy items they see on the networks. Braintree recently partnered with Pinterest to help process payments for the site’s buy button.

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