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Update 6/19: Since the initial publication of this story, Marcus and eBay CEO John Donahoe have gone on the record to say that Marcus was not fired. We’ve updated the story as noted in italics below, and have changed the headline.

Outgoing PayPal David Marcus was shown the door by eBay executives because his vision for the virtual-payment kingpin wasn’t working out, sources within eBay are saying.

In other words, he was fired. Update: Marcus and his former boss refute the claims.

“David’s a product guy. His background is in product. It wasn’t working, and he was pushed out,” a source at eBay with knowledge of the situation told VentureBeat.

eBay president John Donahoe presided over an all-hands meeting at eBay’s San Jose headquarters in early June where Marcus’ departure was announced. At that meeting, Marcus said he was voluntarily stepping down to take a position at Facebook. His role there is vice president of messaging products.

Donahoe wrote to VentureBeat to repeat Marcus’s statement. “David’s decision to leave was his own, and I am very appreciative of what he contributed to Paypal,” Donahoe said in his email.

PayPal’s communications team also denied that Marcus was fired. Anuj Nayar, PayPal’s senior director of global initiatives, put it this way in an email to VentureBeat:

David made a personal career decision to join Facebook. We wish him the very best, and thank him for his leadership and commitment to PayPal over the last three years.

Alan Marks, eBay Inc’s senior vice president for communications, strenuosly denied Marcus was fired.

“The story is flat out wrong,” Marks said.

When Marcus, a motivated and highly intelligent coder by trade, announced he was leaving the CEO job for a VP position at Facebook, there were more than a few raised eyebrows because the change was perceived not as a big move up but a slight move down.

In his roughly three years as PayPal’s president, Marcus ruffled more than a few feathers when he sent a heated and caustic email to all of PayPal’s 14,000 employees.

In that email, Marcus slammed employees for not using PayPal’s mobile app he helped introduce and said that if workers weren’t passionate about the company’s mission they should find another job. Silicon Valley had a field day when the email was revealed.

The email, in part, read:

It’s been brought to my attention that when testing paying with mobile at Cafe 17 last week, some of you refused to install the PayPal app (!!?!?!!), and others didn’t even remember their PayPal password. That’s unacceptable to me, and the rest of my team, everyone at PayPal should use our products where available. That’s the only way we can make them better, and better.

Reactions in the Valley to the email ranged from supportive to outright dismissive.

“Yup — management by intimidation. Not a leader at all. Sure makes me want to use PayPal more often,” wrote VB reader Dawna Bate on a message board.

Marcus was PayPal’s mobile chief when eBay acquired his mobile payment startup, Zong, in 2011. In short order, he was quickly promoted to PayPal president in 2012. In that position, he pushed PayPal to dramatically accelerate its product development, which led to a PayPal mobile app and simpler tools for developers to integrate the company’s transaction technology.

In a blog post, Marcus expounded on his reasons for leaving PayPal for FaceBook:

I realized that my role was becoming a real management one, vs. my passion of building products that hopefully matter to a lot of people…..At first, I didn’t know whether another big company gig was a good thing for me, but Mark’s enthusiasm, and the unparalleled reach and consumer engagement of the Facebook platform ultimately won me over.

Without question, Facebook is hiring a major talent for its messaging team. And his upcoming presence suggests that Facebook intends to make money off messaging by bringing mobile payment functionality into the mix, right up Marcus’ alley.

Read Facebook’s announcement of his hiring here.

PayPal has seen some leadership shakeups and problems over the last several months.

Indeed, in early May, PayPal vice president Rakesh “Rocky” Agrawal, who served for just two months as the company’s director of strategy, abruptly left the company after he released a stream of highly offensive and baffling Twitter messages from Jazzfest in New Orleans calling PayPal executives out by name. Marcus implied in a post that he’d fired Agrawal; Agrawal insists he quit.

And earlier this month, PayPal’s respected senior engineering director April Chang announced she was bailing for a similar job at Eventbrite. Chang had been with the company since 2011.

The changes at PayPal have elicited speculation that there is tumult as the company attempts to grow its user base and focus more on individual consumers. The company was co-founded by Elon Musk, whose team sold it to eBay in 2002 for $1.5 billion.

VentureBeat reporter Mark Sullivan contributed reporting to this story.


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