As the White House prepares to enact a ban on TikTok from being used by U.S. consumers over security concerns, the popular music app’s Chinese-based parent company is looking for a savior in the form of tech giant Microsoft.

FOX Business was first to report Friday that Microsoft has begun talks to buy the entity. According to people with direct knowledge of the matter, the talks have initially focused on TikTok’s smaller U.S. business, but they say Microsoft might want the scale of the entire company which boasts hundreds of millions of users worldwide.

TIKTOK FACES WELL-FUNDED RIVALS, REGULATORY SCRUTINY IN U.S.

Either way, the talks are a realization on the part of Beijing-based Bytedance,  TikTok’s parent company, that it needs to unload its U.S. subsidiary before the Trump administration shuts it down. Investment bankers tell FOX Business if the Microsoft deal falls through, Bytedance will certainly shop TikTok wider including to private equity firms. A person with direct knowledge tells FOX Business there are two to three serious buyers that have expressed interest.

Any deal will be closely scrutinized by the Trump administration. “If Microsoft or any U.S. company buys TikTok this will be carefully monitored to make sure there is absolutely no Chinese involvement in the new company,” said one Wall Street executive with knowledge of the matter.

As FOX Business reported earlier Friday, President Trump is prepared to sign an order to force Bytedance to divest its U.S. TikTok operations over security concerns. The divesture notice followed a review by the Committee on Foreign Investment in the United States (CFIUS), an arm of the Treasury Department. CFIUS has been investigating whether TikTok is sharing its user data with the Chinese government for surveillance purposes—which has been vehemently denied by TikTok.

The discussions between Microsoft began about a month ago as the Trump Administration seemed to be moving ahead with a divestiture notice, these people say. That is when Bytedance approached senior Microsoft executives regarding a sale of at least its US operations.

The decision to approach Microsoft stemmed from a realization that not only was TikTok’s U.S. operations about to be upended by U.S. regulators but also that Microsoft was possibly the only U.S. tech company not in Congress’ crosshairs that has enough cash that would be allowed to make the purchase, these people added.

According to financial records, the Seattle-based tech titan has $136 billion in cash and liquid investments that can be converted into cash.

MICROSOFT’S SMITH TALKED WITH HOUSE ANTITRUST COMMITTEE: REPORT

Microsoft was noticeably absent from this week’s House Judiciary subcommittee on antitrust on alleged abuses by big tech. Thursday’s session on Capitol Hill showed that there is rare, bipartisan agreement that the companies that testified — Facebook, Amazon, Apple, and Google – may be reaching monopoly status and should not be allowed to grow through acquisitions.

A TikTok spokesman declined to comment on “rumors or speculation” but did not deny the talks are taking place. Microsoft declined comment and a Treasury spokesman had no comment.

TIKTOK PLANS TO ADD 10,000 JOBS IN U.S. OVER NEXT THREE YEARS

Bankers are unsure how much TikTok is worth on its own, and it’s even more difficult to estimate the value of just its U.S. business, though some believe it could be valued into the tens of billions of dollars given its growing popularity particularly among young people and influencers.

TikTok has 800 million users worldwide and 80 million in the United States. Those users – posting and sharing short music videos — provide a treasure trove of personal information that the U.S. government believes the Chinese government has forced TikTok to hand over for surveillance purposes.

But these same users and the data they provide could be leveraged by a U.S. company, like Microsoft, for its legitimate business activities as well.

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Microsoft still has questions about any purchase. The tech firm is one of the biggest players in computer software and cloud computing. But it has a limited and mixed record in social media. In 2012 it launched  So.cl (pronounced social) to compete with Facebook but shut it down in 2017. It currently owns and operates LinkedIn, a business-oriented social network with an older demographic that it purchased in 2016.

Microsoft is also unclear if just owning TikTok’s U.S. business is worth the effort, bankers say. The TikTok brand would remain and operate globally. Recently, Facebook has said it is looking to compete globally in the short-video business. Bankers think Microsoft may seek to buy the entire company, but it’s unclear Bytedance wants to sell all of TikTok.

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Four Senate Democrats are pressing the U.S. Postal Service (USPS) over complaints about slow delivery since Postmaster General Louis DeJoy took over in June amid concerns a backlog could affect tallying mail-in ballots in November. 

Sens. Gary PetersGary Charles PetersTrump may have power, but he still has no plan to fight the pandemic 100 Days: Democrats see clear path to Senate majority Hillicon Valley: Feds warn hackers targeting critical infrastructure | Twitter exploring subscription service | Bill would give DHS cyber agency subpoena power MORE (D-Mich.), Amy KlobucharAmy KlobucharGOP sparks backlash after excluding election funds from COVID-19 bill Hillicon Valley: Feds warn hackers targeting critical infrastructure | Twitter exploring subscription service | Bill would give DHS cyber agency subpoena power Democratic senators call for ‘thorough and comprehensive’ review of Google’s Fitbit acquisition MORE (D-Minn.), Tom CarperThomas (Tom) Richard CarperBarrasso nuclear bill latest GOP effort to boost uranium mining Lawmakers weigh increased telework as some agencies push federal workers back to the office Senate report says Russian oligarchs evading U.S. sanctions through big-ticket art purchases MORE (D-Del.) and Charles SchumerChuck SchumerLincoln Project targets Senate races in Alaska, Maine, Montana with M ad buy Pelosi, Schumer say GOP Senate coronavirus bill is ‘selling out working families’ The Hill’s 12:30 Report – Presented by Facebook – Barr’s showdown with House Democrats MORE (D-N.Y.) sent a letter to DeJoy demanding he explain new changes he implemented this month, saying they’ve heard concerns from their constituents over USPS’s quality of service. They also dinged the postmaster general for not responding to a letter Peters sent him earlier this month. 

“It is essential that the Postal Service not slow down mail or in any way compromise service for veterans, small businesses, rural communities, seniors, and millions of Americans who rely on the mail – including significant numbers who will be relying on the Postal Service to exercise their right to vote,” they wrote.

“However, your failure to provide Congress with relevant information about these recent changes or to clarify to postal employees what changes you have directed as Postmaster General, undermines public trust and only increases concerns that service compromises will grow in advance of the election and peak mail volumes in November,” they added.

The senators asked DeJoy to offer a full explanation for each change he’s implemented, provide a list of all processing centers and post offices that have implemented operational changes, and clarify what effect the changes had on service performance. They demanded a response by Aug. 4. 

The letter comes after reports surfaced earlier this month highlighting changes DeJoy made that sparked fears of delivery delays. Among other things, DeJoy told employees to leave mail at distribution centers if delivery of the packages would delay letter carriers from their routes, a measure he defended as a cost-cutting measure. 

The USPS finds itself in a deep financial hole, seeing its coffers deplete in the age of emails and social media.

“In making any changes to Postal Service operations, you should carefully study their service impacts, costs, and other factors in advance, and implement them in a clear and well-documented manner, with the cooperation of unions and key postal stakeholders,” the senators wrote. “It is unacceptable to implement broad and non-transparent changes that may slow down service during a pandemic, when the Postal Service’s capacity as an essential agency is already strained,” the senators wrote.

The move brought on accusations that DeJoy, a North Carolina logistics executive who has donated millions to Republican committees in recent years, is working as a political ally of President TrumpDonald John TrumpTrump campaign cancels ad buys to review messaging strategy: report Nunes declines to answer if he received information from Ukraine lawmaker meant to damage Biden Poll: Plurality of ‘Gen Z’ voters say they see more political ads from Trump than Biden MORE.

Trump has railed against mail-in ballots, arguing without evidence that they are particularly susceptible to fraud and suggested this week that the Nov. 3 election be delayed. 

A Postal Service spokesman told Reuters the agency “is taking immediate steps to increase operational efficiency by re-emphasizing existing plans that have been designed to provide prompt and reliable service within current service standards.”

CEO Elon Musk insists that Tesla is seeing “strong” demand throughout the whole pandemic and the CEO attributes this success to Tesla’s online orders.

During Tesla’s last earnings call, Musk insisted that shareholders and analysts shouldn’t worry about demand despite the automotive industry as a whole seeing a major downturn amid the pandemic.

The CEO repeated several times that “demand is not an issue” and that it “outpaces supply” at the moment.

Now in a interview on the Daily Drive Automotive News podcast, Musk reiterated that Tesla is seeing “strong orders”:

“We saw strong orders through the whole pandemic, we still had a good order volume. I guess people are less inclined to want to go to a dealership, do the test drive and hang out in the lobby and that kind of thing.”

Tesla has been betting on internet sales for a while.

Last year, it was a controversial subject after Musk announced that Tesla would go to a model of online sales only and close most of its stores with the goal to be able to sell the Model 3 for $35,000.

However, the CEO ended up reversing the move later in 2019 and kept most of its retail locations open.

At the time, surveyed showed that while most of Tesla’s sales are done online, most customers still went to the stores to get information from Tesla’s staff and test drive the vehicles before buying.

Musk’s new comments about demand also come after Tesla cut prices across its Model 3 and Model Y lineup last quarter.

Here’s the new podcast on which Musk made these new comments today:

Electrek’s Take

I am sure that Tesla doesn’t have issues with demand, but that’s also because they are pulling some demand levers.

That includes the price cuts and the announcement of the price increase for FSD.

I am sure that Tesla received more orders that they could deliver in Q2 from those moves.

There are also plenty more demand levers to pull like the launches of Model Y LR RWD, Model Y 7-seater, Model S Plaid, and more.

Therefore, I tend to agree with Elon. Demand shouldn’t be an issue any time soon.

Subscribe to Electrek on YouTube for exclusive videos and subscribe to the podcast.

LOS ANGELES — Trader Joe’s, which said earlier this month it was moving to change the names of some of its products after an online petition denounced them as racist, now says it will stick with labels like Trader Jose’s and Trader Ming’s for Mexican and Asian food.

“We want to be clear: we disagree that any of these labels are racist,” the popular grocery chain said in a statement posted on its website. It added, “We do not make decisions based on petitions.”

The petition posted on change.org by a high school student claims the names create “a narrative of exoticism that perpetuates harmful stereotypes.”

Other Trader Joe’s names cited include Trader Giotto’s and Trader Joe San for Italian and Japanese foods.

After the petition was launched Trader Joe’s issued a statement saying it has been in the process of updating such product labels.

“While this approach to product naming may have been rooted in a lighthearted attempt at inclusiveness, we recognize that it may now have the opposite effect — one that is contrary to the welcoming, rewarding customer experience we strive to create every day,” company spokeswoman Kenya Friend-Daniel said at the time.

But in its recent statement the grocery chain said it still believes the names, many created decades ago, represent lighthearted efforts at inclusion, adding that its customers say they still like them.

“We thought then — and still do — that this naming of products could be fun and show appreciation for other cultures,” the company added.

That was news to Briones Bedell, the San Francisco Bay Area high school senior who launched the petition drive.

“It seems to be this complete reversal of their previous commitment to removing names from international foods that the corporation themselves have described as not being conducive to creating a welcoming customer experience,” she told The Associated Press.

In an email Friday, Friend-Daniel said the company has indeed dropped some names over the years, including Arabian Joe’s and Armenian Joe’s, and may drop others in the future. But that will be solely on input from its employees and customers and not Bedell’s petition.

“Moving forward, we will continue to evaluate those products with name variations that remain in our stores,” Friend-Daniel said. “If we find certain product names and-or products are not resonating with customers, we won’t hesitate to make changes.”

Bedell, who described herself and her family as frequent Trader Joe’s shoppers until she launched her petition drive, said she always found the names in question offensive.

But she didn’t launch her petition drive, she said, until she looked into the history of the company founded by the late Joe Coulombe in 1958.

The chain’s website describes how its name and South Pacific decor were inspired by his reading of the book “White Shadows in the South Seas” and a ride on the Disneyland Jungle Boat Cruise, a comical attraction that takes people along rivers populated by rhinos, native headhunters and others that threaten to attack them.

She saw the book and the ride as being filled with racist stereotypes of native savages and white gods that she says Trader Joe’s appropriated to sell food and beverages.

“It’s intended to allow the consumer to build up this perceived sophistication through their knowledge of worldliness through their choice of food,” she said. “But it’s not a cultural celebration or representation. This is exoticism. These brands are shells of the cultures they represent.”

Although her petition had more than 5,000 signatures Friday, it’s brought Bedell some intense blow-black across social media, where she’s been the frequent target of vile, sexist insults and other name-calling.

Interestingly enough, she said, the criticism has come from across the political spectrum, with conservatives denouncing her for promoting cancel culture while liberals accuse her of wasting time on a trivial issue.

Despite that, she wants the debate to continue.

“I’ve just been really grateful that this has sparked as much conversation as it has,” she said. “I hope in any future endeavors I can act as a facilitator so people can make up own minds about what is right.”

This story has been corrected to show the spelling of the last name of Trader Joe’s founder is Coulombe.

Posted on July 31, 2020 at 3:42 pm by Carol Tannenhauser

Dining in the Hi-Life atrium.

By Carol Tannenhauser

On Thursday, July 30th, the New York State Liquor Authority (SLA) suspended the liquor license of Hi-Life Bar & Grill, on 83rd Street and Amsterdam Avenue, for allegedly violating the dining-in ban still in effect in New York City due to the coronavirus.

“I’m still reeling,” said owner Earl Geer, in an email to WSR. “A half hour ago, reps from the SLA came with cops to shut our bar down. Last night, we were given a notice by an SLA rep for utilizing our sidewalk café atrium, with French doors open, to serve diners. This is a gray area, as it has a fixed roof.”

Geer said he was under the misunderstanding that when guidelines were modified to include street seating with solid overhead covering, i.e. tents, that seating in his cafe, with all doors open and also plexiglass separating diners, was in compliance.

“We complied immediately on Wednesday night, but today we learned that the ‘Full Board’ voted and suspended a number of licenses, including ours. So much for three strikes,” he added.

The fine for the violation could be as much as $10,000, Eater said.

Geer emphasized that he is “very supportive of Governor Cuomo and all he has done to keep New York City safe, and will always comply with city and state regulations. “While we would have appreciated a warning,” Geer said, “We apologize for the misunderstanding and any noncompliance.”

“I’m heartbroken,” said Upper West Sider and tipster Joe Mutz. “I’ve consumed more meals there than I can count.”

Until the matter is resolved, Hi-Life’s kitchen will remain open for outdoor dining and delivery, and will offer complimentary watermelon and mint-infused water, ice teas and Arnold Palmers. Geer is calling this a “neighborhood booze cleanse.”

Earl wrote about the difficulties of operating a restaurant amid the pandemic here.

The staff of Hi-Life created a GoFundMe account to help with Hi-Life’s legal expenses and lost business. Click here to donate.

A detached electrical connector on the second stage of Rocket Lab’s Electron rocket caused a failure on a July 4 mission that destroyed seven small commercial satellites, but the company said Friday it is on track to resume launching before the end of August.

Once the electrical system disconnected in flight, it cut power from the rocket’s battery to the electric turbopumps on the Electron’s second stage Rutherford engine. That caused the engine to switch off prematurely around five-and-a-half minutes after the rocket took off from Rocket Lab’s launch base in New Zealand.

The early engine shutdown prevented the rocket from reaching the velocity necessary to enter a stable orbit around Earth, according to Peter Beck, founder and CEO of Rocket Lab, a small satellite launch company headquartered in Long Beach, California.

But telemetry continued streaming from the launch vehicle back to Rocket Lab’s control center in Auckland, New Zealand, allowing engineers to analyze data and determine the cause of the failure. The kerosene-fueled second stage engine shut down in a controlled manner, and the rocket coasted to an altitude of around 121 miles (195 kilometers) before re-entering the atmosphere and burning up.

The seven satellites lost in the launch failure were owned by Canon, Planet and a British startup company named In-Space Missions.

Improved testing should be able to catch defects in the type of electrical connector that led to the July 4 failure, and engineers believe no design changes will be required on the Electron rocket before future flights, Beck said.

Before this month’s accident, the Electron rocket had amassed a flawless success record since entering commercial service in 2018.

“This is the launch industry, and unfortunately these things do happen,” Beck said Friday in a conference call with reporters. “I think Electron has somewhat earned its stripes with the fact that we’ve put 53 customer payloads into orbit without fail.”

The failed launch July 4 was the 13th flight of an Electron rocket, and marked the second time an Electron failed to reach orbit, following a problem on the first Electron test flight in 2017. No customer payloads were aboard the inaugural test flight.

Working under the oversight of the Federal Aviation Administration, which regulates U.S. launch companies, Rocket Lab engineers traced the cause of the July 4 launch failure to a problem with an electrical connector on the vehicle’s second stage.

The faulty connector evaded Rocket Lab’s pre-flight testing procedures.

“Basically, you could define it as really a thermal fault,” Beck said. “So while all of that testing showed no issues, after a period of time, one of the joints had a higher resistance, and that higher resistance led to heating.

“That heating then led to thermal expansion of one of the components,” he said. “That thermal expansion and heating allowed some of the potting compounds around that joint — (intended) to keep it secure from vibration — to flow.”

Beck said the problem was a “very, very sneaky and tricky issue to screen for” during testing. Engineers did not uncover the faulty electrical connector before the July 4 mission because it remained secure during Rocket Lab’s standard pre-launch vibration and thermal vacuum testing.

“However, the issue is well understood by the team,” Beck said. “We have 600 people working at Rocket Lab, and this is everybody’s No. 1 priority.”

In a press release Friday, Rocket Lab said engineers seeking the root cause of the failure reviewed more than 25,000 channels of data from the Electron launch vehicle, and performed extensive testing on the ground.

“It reminds everybody just how incredibly hard this is, and spaceflight has no tolerance for any error whatsoever,” Beck said.

Here’s the moment the video feed from Rocket Lab’s Electron launch vehicle ended & live telemetry appeared to show the rocket stopped accelerating.

The data feed showed the rocket reached a peak altitude of 194.8 kilometers before falling back to Earth.https://t.co/GMLbgXLtm5 pic.twitter.com/mCydc8XJzI

— Spaceflight Now (@SpaceflightNow) July 4, 2020

Rocket Lab said its team “was able to confidently narrow the issue down to a single anomalous electrical connection.”

“This connection was intermittently secure through flight, creating increasing resistance that caused heating and thermal expansion in the electrical component,” Rocket Lab said. “This caused the surrounding potting compounds to liquify, leading to the disconnection of the electrical system and subsequent engine shutdown.”

“The liquefaction of this potting compound is a result of the additional heat caused by the resistance,” Beck explained. “When those potting compounds are able to flow, it doesn’t create great electrical connections.”

Beck said Rocket Lab has produced 728 similar electrical connectors to date — with numerous connectors on each rocket — and none exhibited the problem that led to the July 4 failure.

“We know the electrical connection was improper, but we have incredibly diligent teams who build these battery packs, and build a tremendous number of them,” Beck said. “It’s hard to say if it was necessarily a manufacturing defect, or just an anomalous connection.”

Beck said Friday that engineers were able to replicate the problem in testing, and they know now what to look for to root out the problem in hardware slated for future Electron flights.

The FAA, which licenses commercial satellite launches by U.S. companies, has cleared Rocket Lab to resume flights, according to Beck.

The company aims to launch its next Electron rocket before the end of August from its privately-operated spaceport on New Zealand’s North Island. That could be followed in September by Rocket Lab’s first launch from a new pad at the Mid-Atlantic Regional Spaceport on Wallops Island in Virginia.

Rocket Lab did not announce what payload will fly on its next mission from New Zealand. Before the July 4 failure, a small radar surveillance satellite from Capella Space was assigned to Rocket Lab’s next launch.

The first Rocket Lab mission from U.S. soil in September will carry into orbit a small U.S. military satellite.

Rocket Lab’s upcoming missions were delayed several weeks by the failure investigation, but Beck said Friday the company is still on track to launch at least one flight per month for the rest of this year.

Beck said engineers also examined other parts of the rocket in their investigation to find the cause of the July 4 launch failure, and identified other areas for improvement.

The Electron is designed to deliver payloads of up to 330 pounds (150 kilograms) into a polar orbit some 310 miles (500 kilometers) above Earth.

Made of carbon fiber materials and powered by 3D-printed engines with electric turbopumps, the Electron rocket has numerous missions on the books, including flights for the U.S. military, the NRO and NASA, which announced a contract earlier this year for Rocket Lab to launch a CubeSat to the moon.

“The reality is that anybody who flies on Electron now is going be flying on a more reliable vehicle than before,” Beck said.

Email the author.

Follow Stephen Clark on Twitter: @StephenClark1.

Making Venmo a true money machine for PayPal will depend on its new general manager, Darrell Esch, a PayPal veteran who took over the role in March after the company cycled through leaders over the previous four years. PayPal acquired Venmo as part of its $800 million purchase of startup Braintree in 2013.

“This is our time and we’re really going to seize the moment,” Esch told MarketWatch this week in an exclusive post-earnings interview.

Once primarily a way for friends to split the dinner check without paying fees, PayPal’s Venmo service has increasingly become a tool that lets people pay artists for virtual concerts or tip service workers during the pandemic. Those types of payments can lead to more revenue for Venmo, as the service can charge the merchants on the other end of the transaction,much like core Paypal does, while continuing to allow users to send payments for free, and Esch hopes that Venmo can expand further into business payments.

The company has been slowly plodding along with attempts to monetize Venmo over the past three-plus years, but now it plans to “bring a lot of feature functions and capabilities to market over a relatively short period of time,” Esch said. The company is in the process of introducing QR code payments and will launch its own credit card, adding to existing options like a debit card and an online checkout button.

Venmo’s prior general manager came from a Braintree background, focused on digital payments infrastructure to big tech companies like Uber Technologies Inc.
UBER,
+0.06%
and Dropbox Inc.
DBX,
+1.60%.
He recently left for the world of venture capital.

Esch, who’s been with PayPal long enough to remember when its original peer-to-peer money-transfer service was simply called email payments, steps into the position as PayPal embarks on a new chapter in its corporate history. It’s been just over five years since the company split from eBay Inc.
EBAY,
+1.02%,
and now eBay is moving to manage payments on its own, relegating PayPal to a more minor role on the marketplace.

With the potential for some lost eBay revenue, Venmo represents the next big growth avenue for PayPal, which just posted a record quarter as the COVID-19 crisis drove surging demand for e-commerce. The company is looking to capitalize on a ballooning user base: More than 60 million people used Venmo for a transaction in the 12 months through June, up from 52 million in the 12 months through December.

“The goal is to move beyond being an app for payment between friends,” Esch said, and transform Venmo into a “really ubiquitous digital wallet that lets consumers spend and pay” at businesses as well.

New features

One of the company’s new initiatives is business profiles, an attempt to get sole proprietors and other individuals to accept Venmo as payment and to establish a formal relationship with the service. The business accounts are currently in an invite-only phase and businesses can use them freely for now, but PayPal eventually plans to charge businesses 1.9% of the total plus 10 cents for each transaction made to one of these accounts.

Of course, many sole proprietors already accept Venmo payments from their personal accounts without paying any fees, but Esch is optimistic that they’ll gravitate over to business profiles in order to benefit from the social aspects of Venmo’s network as well as new payment capabilities.

“Creating the business profile will be a way to expose the business to a massive and fast-growing base of customers,” Esch said. PayPal has said that Venmo users routinely browse the service even when they aren’t sending money, just to see who their friends are paying, and Venmo plans to apply special labels to businesses that are popular with customers or especially active on the service.

The business accounts tie into PayPal’s broader efforts to participate in the in-store payment landscape. The company has long tried to gain a foothold in physical stores, and it’s now hoping to do so through QR codes given heightened interest in contactless payments due to the pandemic. Those small merchants running business profiles will be able to accept QR code payments, and PayPal announced earlier this week that CVS Health Corp.
CVS,
-1.65%
would begin accepting PayPal and Venmo QR codes at 8,200 stores by the end of the year in its first such partnership with a big chain.

Esch said that his long tenure at PayPal shaped his approach to the effort, as Venmo will be able to leverage the same technology as core PayPal on QR codes.

“We’re able to move faster when we move as one team,” he said.

QR codes are huge in China, but Bernstein analyst Harshita Rawat recently wrote that she doesn’t except them to take off in developed markets quite like they did there. “Rather we expect QR codes to emerge as one of the many ways to pay for small, everyday transactions in certain verticals,” she said in a note to clients.

They may prove more popular for the type of payments for which consumers typically rely on Venmo.

Barclays analyst Ramsey El-Assal sounded more upbeat about PayPal’s efforts, writing that QR codes could be a “game-changer” for the company, with the opportunity to leverage existing relationships with merchants and give the feature a big marketing push.

Venmo more generally benefits from PayPal’s existing relationships with more than 26 million merchants, as users can already make e-commerce purchases through a dedicated Venmo checkout button on merchant pages.

Venmo competes with Square Inc.’s
SQ,
+0.55%
Cash App, among other mobile wallets. While PayPal’s strategy with Venmo involves more deeply integrating the product into the merchant landscape, Square has pursued a slightly different strategy as it tries to grow the Cash App, including by adding bitcoin and equities trading.

Gaining credit

Another big focus for Venmo is the brand’s first credit card, due out later this year. Even before taking over as general manager, Esch advised Venmo on its card rollout given his familiarity with all things credit and his experience working on Bank of America cards prior to joining PayPal. The world of credit cards is crowded, but Esch said that Venmo will aim to differentiate its card in part by creating a compelling in-app experience that captures the “community” essence of the service.

“It’s going to feel very much like a Venmo product and not just another credit card,” he said.

The company already has a debit card that lets people use their Venmo accounts to buy things online and in stores, with the option to share those purchases on their feeds.

The ’Holy Grail’

Venmo is also going after direct deposits, which Bernstein analyst Lisa Ellis has argued could be the service’s Holy Grail. The company allowed users to receive their stimulus payments in their Venmo accounts via direct deposit, and now the goal is to get people to send their regular paychecks to Venmo this way.

With peer-to-peer payments, many users who receive money will opt to transfer that money over to their bank accounts, sometimes paying a small fee for the ability to do so instantly. (Some analysts estimate that this Instant Deposit feature is currently Venmo’s biggest revenue source.) Direct deposit customers are appealing because they would be engaging in the opposite behavior, housing their money within Venmo and then engaging in revenue-generating activities when they make purchases through the service.

“Wherever your paycheck is going, that’s your home base, and banks typically own that,” Ellis told MarketWatch in June. She said that it’s still unknown whether people will find enough value in the Venmo user interface to make that sort of shift worthwhile but suggested that one incentive might be a user-friendly bill-pay feature that lets users handle all such recurring payments in one place.

PayPal Chief Executive Dan Schulman sounded more confident on the company’s earnings call this week that Venmo can win these users. “I would not underestimate how zealous the customers of Venmo are about living their financial life on the platform,” he said.

Schulman called Venmo “a crown jewel” for PayPal and said that Venmo benefits from various new habits that have emerged from the pandemic, including live-streamed exercise classes and online concerts.

The company last disclosed a Venmo revenue run rate of $450 million back in January but declined to give an update on the latest call, only to say that Venmo revenue was up 60% from a year earlier during the first three weeks of July. The service’s contributions are so far a drop in the bucket for PayPal, which is expected to generate more than $21 billion in revenue this year, but Wedbush analyst Moshe Katri said he “wouldn’t be surprised” if the business gets to $1 billion in revenue in a year or two.

”What I think is really impressive is the fact that they’re adding more and more solutions to the platform… that at this point will make this really sticky, or stickier,” he said. He views the company as being in the process of “mainstreaming” Venmo by catering to a broader segment of the population beyond millennials.

Paypal stock has gained 74% so far this year versus near flat performance for the S&P 500
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+0.76%.