PayPal acquires mobile commerce platform Modest, run by Obama’s former campaign CTO

PayPal has made its first acquisition since it became a standalone public company. It announced today the purchase of the mobile commerce platform Modest, to bring in expertise in contextual commerce. Modest’s capabilities and team knowledge will be integrated within the Braintree platform. Financial terms of the deal were not disclosed.

Modest was founded in 2012 to help merchants create better experiences for their customers. With this platform, businesses could easily create their own app or integrate their stores within existing apps. Additionally, the company provided tools to help merchants add buy buttons into other channel marketing efforts while also selling products on third-party sites.

Above: Dylan Richard and Harper Reed

Image Credit: Daniel X. O'Neil

The company was started by Harper Reed and Dylan Richard, two people who understand commerce and the customer experience. Reed is perhaps best known for being the chief technology officer for President Obama’s 2012 re-election campaign. He worked with Richard then, as well as during their time at Threadless. Richard also did a stint at Crate & Barrel, so both are well-versed in the merchant point of view.

So why sell to PayPal? Reed told 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.”

Braintree general manager Juan Benitez chimed in saying: “We’re really excited to have Harper and Modest as part of Braintree…We’re going to capitalize on [not only] the merchant experience and knowledge that Modest has, but also the technology. They’re great additives to the Braintree platform.”

The acquisition by PayPal and integration with Braintree probably shouldn’t be that surprising. Both Reed and PayPal senior vice president and global head of merchant and next-generation commerce Bill Ready have been acquaintances for a while. Reed had shown Modest to Ready, and over time, both had come to the conclusion that they were working on similar stuff and that there was a connection between their companies. The natural next step was to take the plunge and merge.

As mentioned earlier, PayPal will leverage Modest’s capabilities to tackle contextual commerce. This is a new category of shopping that leverages data and current circumstances to market to consumers something that they’d find interesting. Benitez cites Pinterest’s Buyable Pins, which were released in June, as an example (and something that was built off of Braintree). One of the core tenets of Modest seemed to be its desire to help make buying from merchants easier and faster than before.

Now that Modest is part of Braintree, what will the acquisition mean for developers? For those trying to build a commerce app or product, having the Modest team and technology incorporated means that Braintree has someone onboard who has lived through being a merchant. Reed told us that at Modest, one of the things his team thought about was, “how do we appeal to the everyday retailer?” Additionally, Reed said that there’s a huge opportunity to help give retailers the necessary tools to grow from being a small, to a medium, to a large-scale business.

Although owned by Silicon Valley-based PayPal, Modest and its employees aren’t relocating nor are they being let go. Reed says that the best part of the deal is that the entire team will be staying in Chicago, Ill., where the company was founded. Braintree has a presence in the Windy City so it made sense that Modest stay put. That location “is an important center of talent and innovation” for Braintree, said Ready.