There's a big gap between the PayPal (PYPL) story/investor slide deck and market reality. As an investor we like it - hits all the right notes and management has all the right answers. But as a user we scratch our head and wonder where all the innovation is. (PayPal was very innovative in the early days. They were founded in 1998. That's eons in the software world.)

The CEO, Dan Schulman, said in his presentation on Sept 17th at the DB conference that they were on old difficult-to-change software but now after major investments they are on a more modern easy-to-adapt platform. Could he be talking about Braintree/Venmo which they recently acquired? If so it's apples and oranges. Venmo is the basis of the PayPal "OneTouch" offering aimed at mobile and for in-app purchasing. This isn't the core platform today.

We like the acquisition of Braintree/Venmo but it begs the question of whether PayPal has any native ability to innovate and develop great software. If they have it we have not seen it. The real innovator in the software space is Stripe which has built a new platform from the ground up.

Using the existing PayPal platform next to Stripe feels like using a mainframe computer terminal next to an iPhone. From a developer-perspective the difference is even more stark. Stripe has catered to and wowed developers from Day 1.PayPal has a history of being hostile and uncooperative with developers which continues to this day, in part because of their multiple legacy software platforms. They probably couldn't be developer friendly even if they wanted to.

Back to Mr. Schulman's presentation - he says all the right words about being a platform the developers can easily integrate to for all their e-commerce needs. But as a user I can tell you that the marketing doesn't match the product. It doesn't work, you can't do it and there is no easy support to help you make it work. We've worked with PayPal as a vendor for a decade before moving to Stripe this year in order to escape the periodic outages and ridiculous challenges to make the system do what it is supposed to do.

I wouldn't want to be PayPal in the competitive market they face. Stripe is eating them from below and powerful, profitable companies like Visa, MasterCard and American Express are ready for the fight. Add some technology firms like Apple to the melee and it feels like finding new sources of incremental margin will be difficult.

CEO Schulman expects to compete on all fronts - best platform for developers, leading brand/relationship with consumers and terrific solution provider for retailers. As far as I know this has never been accomplished. Maybe one or two of the three is possible but not all three.

Going back to the September 17th presentation - the language is stunning. Just because the success of an acquired product like Braintree/Venmo the CEO is willing to tout the capabilities of PayPal as if they were responsible for the success of that platform themselves. I might as well tout the amazing capabilities WordPress and how it makes IPO Candy such an innovator!

With software the devil is in the details. I've argued it many times and thankfully software always proves me right. PayPal came in with multiple legacy systems that are terrible and has added some nice pieces of software by acquisition. Weaving them all together and creating some kind of magical super-platform is what the Powerpoint deck suggests they will do. I wouldn't count on it!

We're treating PayPal as a pseudo-IPO since they were acquired out of registration and have finally been spun off as a separate company. Their equivalent of a "roadshow deck" will be available on IPOIQ.

As an illustration here is the current listing of "business products" from PayPal. Trying to figure out which one is right, moving from one to another and making them work together is either a nightmare or an impossibility. Try it! 

[I'm not long or short the stock, nor have I ever been. I see many who are pre-disposed to like PayPal and are still trying to get their arms around the story. The slide deck is great, the CEO rhetoric is comforting, and if they manage the company well it could be a financial success. But it won't be a thing of beauty.]