One Man's Trash is Another's Man Treasure – The Story Behind eBay
What does it take to create the perfect auction site for worldwide users?
For Pierre Omidyar, the face behind what we today know as eBay, it all began with a simple idea- to design a platform 'dedicated to bringing together buyers and sellers in an honest and open marketplace'.
Once the platform was born, the global market became impossible to imagine without the existence of eBay as we know it.
Much like any aspiring innovator, Pierre strived to create something new, practical and even essential to the online marketing branch. Even so, never had Omidyar thought that the simplest of ideas could grow so large and influential that the world of e-commerce couldn't do without it.
So, how did Pierre Omidyar land himself into e-commerce fame?
Pierre, The Altruist
Born in Paris, Pierre has been fond of computer science ever since he was a child. His father was a surgeon, and his mother has a doctorate in linguistics from Sorbonne, creating a strong academic background that encouraged Pierre when it came to education. While in his preteens, he moved with his family to the USA so Pierre's father could work at Johns Hopkins University in Maryland.
Pierre's fascination with computers started at an early age, and at 14, he developed his very first computer program. The program had nothing to do with marketing or business – he created it for his school library in order to catalog books.
His love for computers kept growing, so he enrolled at Tufts University to study computer sciences. He got his bachelor's degree in 1988 and soon after, he started working for Claris, an Apple subsidiary.
Here, he saw the modern tech that inspired his imagination for the first time, and quickly rose through the ranks. Soon, he was part of a team that upgraded MacDraw to MacDraw II. Pierre's vision cleared, and he set out to work on his own initiatives.
In 1991, Pierre co-founded the pen-based software company Ink Development Corp, which later on rebranded as an e-commerce entity called eShop Inc. Pierre worked on the beginning aspects of e-commerce with eShop, creating practices and habits that would last him a lifetime.
Three years later, he left his work at eShop and worked as a developer services engineer for General Magic. In 1996, eShop was bought by Microsoft for $50 million, and Pierre got a million from the sale.
The money was nice, but it never motivated Pierre. Like all innovators, he wanted to make the world a better place for ordinary people - and his pocketed million wasn't getting that done.
So, he moved on.
The Idea Behind eBay
Pierre had an interest in how markets and trades worked. He thought that if everyone had access to the same information, goods would have realistic prices.
However, reality hit him when he wanted to buy shares in a gaming company. Even though the company went public at $15 a share, his broker told him that he got the stock at $24. Pierre didn't understand why people don't have equal opportunities in investing and came to the realization that regular people are locked out of this type of market.
Then the wheels in his head started turning: use the power of the Internet to create an online marketplace in which everyone can participate? A market created and dictated by everyday people?
In the blink of an eye, the idea for eBay was born.
Pierre initially began working on his idea for a person-to-person auction site while he still had his regular job at General Magic. On September 4, 1995, just in time for Labor Day, he launched his site under the name of Auction Web. Interestingly, the first item sold on this page was a broken laser pointer, sold for $14.83.
The Canadian Mark Fraser was the one who bought it and he said that he was looking for a laser pointer he could use during his presentations, but they were very expensive so he couldn't afford them. When he realized people sold broken ones, he thought he could repair it and use it without spending a lot of money.
This was the start of a whole new era of e-commerce!
Pierre's site kept growing, and after 9 months of hard work, he decided to devote himself full time to the new community he created.
He quit his full-time job and dove into his passion!
The Rise of eBay
One of Pierre's master strokes was the feedback forum incorporated into eBay. It's obvious that no matter what you put online, you will receive feedback, and Pierre received messages from both buyers and sellers. This inspired him to create a feedback forum where users could give each other reviews. He also wrote a letter addressing everyone registered on the site, in which he politely asked people to leave their comments there, positive or negative.
Soon, more items were put up for sale, and the site became popular very quickly. To expand the business, Pierre signed a deal to sell airline tickets online in 1996, and hired Jeff Skoll as the first Board President at AuctionWeb. During that period, the site hosted 250,000 auctions, and by January 1997, over 2 million transactions were made!
In that same year, AuctionWeb received $6.7 million from Benchmark Capital and changed its name to eBay. With the rebranding, Pierre started an aggressive marketing campaign that brought even more users.
In 1998, Pierre and his partner Jeff decided to step back and make Meg Whitman the CEO of eBay. Pierre declared that he would be just helping her behind the curtains, and that Meg was running the show. Under Meg's management, however, the site experienced various ups and downs, and it once even went down for 22 hours!
As it was her decision to call each one of their top 10,000 sellers, Meg could only offer a sincere apology in return. She wanted to make sure that the company's philosophy aligned with what they were doing – serving people - and that mistakes can happen, but there are consequences for it. Pierre stood by her through it all.
When the company went public in 1998, they were priced at $18 a share and closed at around $47. The company kept growing and expanded in other countries like Japan, Germany, Canada, and the United Kingdom, eventually delivering worldwide!
eBay remains one of the most successful companies in the world with around 200 million users. With only 30 employees when Meg Whitman became CEO in 1998, the company has grown significantly, and today has over 13,300 employees in 32 countries.
eBay has also been included on Fortune's list of Change the World Companies, named as one of America's Most Responsible Companies by Newsweek, while also holding a 100% rating for equality on the Corporate Equality Index.
Where's Pierre Now?
Pierre retired from the board of directors just before eBay's 25th anniversary, but he will retain the title Director Emeritus. He could also attend board meetings, but he doesn't have any voting power. Financially speaking, Pierre owns 5% of eBay and 6% of PayPal.
Even though Pierre was already donating to charitable causes, he still wanted to contribute to a better world, which led to creating the Omidyar Network. Founded by Pierre and his wife in 2004, the main goal of this company is to help NGOs across the globe with their fight for economic, political, and social change.
It's estimated that Pierre and his wife have donated over 98% of their total fortune across the years - true philanthropists! Just goes to show - sometimes you just want to realize an idea, regardless of the results!