PayPal snags Iron Pearl to focus on user growth

By Richard Nieva , written on April 11, 2013

From The News Desk

Iron Pearl, a service that aims to systematically grow the user base of websites, was getting all set to launch after it had been testing its product in private beta with some services like Goodreads.

Then, just as the launch was getting close, another early tester, PayPal, came a-calling, and the service acquired the startup, even before Iron Pearl struck out on its own. The companies made the announcement today, but would not disclose the terms of the deal.

“Growth hacking” has been buzzy in Silicon Valley of late. (You know something has reached buzzword status when organizers plan an event called a “growth-a-thon.”) But Iron Pearl set out to make that kind of growth more methodical and systematic with a set of tools that track and tests users habits, to see what’s working and what’s not. “In most big companies, you have content management, analytics, and testing, and you’re lucky if those three groups are in the same building,” says Stan Chudnovsky, the company’s founder who will now be PayPal’s VP of growth, reporting to PayPal president David Marcus.

Chudnovsky’s product puts all three groups together and runs tests quickly with the help of an algorithm. He says one of the big advantages of the product is the ability to understand a product’s reach by looking at things other than raw numbers and conversion rates.

PayPal acquired Iron Pearl’s intellectual property and will now use the product as an in-house growth tool to expand the pioneering, if until recently, stagnant, payment service’s user base. Marcus, who took over as president in March of last year, has been waging an experiment to make PayPal more of an offline tool, in addition to the online checkout service. For example, customers can use their PayPal accounts at brick and mortar stores like Home Depot and Jamba Juice. Marcus says Chadnovsky’s product will help to grow that nascent part of the business.

But PayPal’s main Web-based payments product has been under siege by some time by scrappy upstarts. Stripe has gotten traction with many developers in the Valley, and Braintree has tried to plant its flag in mobile commerce. Balanced has decided its specialty is in peer-to-peer marketplaces. So the acquisition could also be a tactic in PayPal just trying to get its foundation right.

Marcus dismisses that idea, saying, “We don’t see a difference between offline and online.” But he does concede, “Our core business could be a lot, lot bigger. We want to get more users, regardless of where they use PayPal.

Ironically, the one brand that will not be growing is Iron Pearl, the one with the growth expertise. Asked if he regrets not having the opportunity to live the startup life – with all the romance and stress that comes with trying to build from scratch – Chudnovsky gives a been-there-done-that response. He’s already done that, after starting his old company Tickle. “We’ve never tried to apply this entrepreneurial essence to a big company, with the right timing, where the entire concept of money is changing,” he says.