eBay's History The History of eBay eBay was founded in Pierre Omidyar's San Jose living room back in September 1995. It was from the start meant to be a marketplace for the sale of goods and services for individuals. In 1998, Pierre and his cofounder Jeff Skoll brought in Meg Whitman to sustain the success. Meg had studied at the Harvard Business School and had learned the importance of branding at companies such as Hasbro. Meg culled her senior staff from companies such as Pepsico and Disney, created an experienced management team with an average of 20 years of business experience and built a strong vision for the company -- that eBay is a company that's in the business of connecting people, not selling them things. They quickly shed the image of only auctioning collectibles and moved into an array of upscale markets where the average sale price (ASP) is higher. ASP is a key metric in determining eBay's transaction fees, so increasing the ASP became an important item. By forging partnerships with namebrands such as GM, Disney and Sun, eBay has managed to do exactly that.

Sun has sold $10 million worth of equipment and it now lists between 20 and 150 items per day. The Business Model eBay has built an online person-to-person trading community on the Internet, using the World Wide Web. Buyers and sellers are brought together in a manner where sellers are permitted to list items for sale, buyers to bid on items of interest and all eBay users to browse through listed items in a fully automated way. The items are arranged by topics, where each type of auction has its own category. eBay has both streamlined and globalized traditional person-to-person trading, which has traditionally been conducted through such forms as garage sales, collectibles shows, flea markets and more, with their web interface. This facilitates easy exploration for buyers and enables the sellers to immediately list an item for sale within minutes of registering. Browsing and bidding on auctions is free of charge, but sellers are charged two kinds of charges: When an item is listed on eBay a nonrefundable Insertion Fee is charged, which ranges between 30 cents and $3.30, depending on the seller's opening bid on the item. A fee is charged for additional listing options to promote the item, such as highlighted or bold listing.

A Final Value (final sale price) fee is charged at the end of the seller's auction. This fee generally ranges from 1.25% to 5% of the final sale price. eBay notifies the buyer and seller via e-mail at the end of the auction if a bid exceeds the seller's minimum price, and the seller and buyer finish the transaction independently of eBay. The binding contract of the auction is between the winning bidder and the seller only. eBay was founded in 1995 by Pierre Omidyars The main purpose - LEG - 500 View Full Document 4 Amazon Vs. eBay You can find just about any and everything on eBay, including cars, collectibles, DVDs, artwork, etc. In 1998 eBay went public. On the first day eBay target share price was supposed to be $18 but it went to 53.50. Also in 1998 they had record setting merchandise sales of 100 million with revenue of 6 million. By 2000 eBay became the internet’s top auction site. As eBay grew into the company that they are today they had some tough times. They had to deal with fraud.

People was buying product and the buyer never received any of their purchases. They also had to deal with the site going down for hours at a time. This did not stop Pierre from working out a solution to his problem and building the site to be what it is today. Three profitable ratios that investor may be interested in when looking are the gross profit margin (sales-cost of goods/sales), the net profit margin (net income after taxes/sales), and the return on assets (net income after taxes/total assets). So analyzing eBay and Amazon profitable ratio, we will see who have the best ratio. Amazon gross profit margin is 29.33 billion-20.67 billion/ 20.67 billion gives a profit margin of 0.30:1. eBay net profit margin is 17.9 billion-5.73 billion/5.73 billion gives a profit margin of 0.68:1. The net profit margin for Amazon is 214 million/29.33 billion is 0.72:1. eBay net profit margin is 46 million/17.9 billion is 0.26:1.

The return on assets for Amazon 214 million/ 54.505 million is 3.9:1. eBay return on asset is 17.9 billion/ 45.132 million is 3.9. So from this information eBay has the better profitable ration that investors would be interested in. Anything and everything can have a positive or negative effect on a business. It is stock market March Maddens in the investing world. It is when you have two stocks going against each other and the investors pick the stock that they feel will outperform the other. This year we 5 Amazon Vs. eBay have Amazon vs Google and eBay vs Visa. This can have a very big effect on these companies. This preview has intentionally blurred sections. Sign up to view the full version. Re: eBay was founded by Pierre Omidyar in 1995, an... - The eBay Community The eBay Community Auto-suggest helps you quickly narrow down your search results by suggesting possible matches as you type.

Showing results for Float this Topic to the Top Bookmark Posts: 1 Registered: ‎23-09-2010 eBay was founded by Pierre Omidyar in 1995, and became a notable success story ... Omidyar had tried [ Edited ] eBay was founded by Pierre Omidyar in 1995, and became a notable success story ... Omidyar had tried to register the domain name echobay.com, but found it ..... a standard Internet shopping site for consumers with United States addresses. More Go to: Images · Videos 16/02/2016, Dear Pierre Omidyar, I wish to ask how hands on with your company you still are. I have been a member of ebay since its start and have enjoyed many years of carefree selling. I have just been involved in a dispute where I feel totally let down by your company , and violated by my status as an ebay seller. You change your rules to suit yourself without giving a voice to your clients that have supported you throughout your tenure. Any buyer seems to have the right (supported by you) to do whatever they like irrespective of any rights of the seller.

The cancellation of ‘right of reply’ by taking away of the return feedback, The gathering of extra income by putting a levy on customers postal charges. Any ground rules that a seller may be entitled to i.e. a valid returns policy, are ignored to bend over backwards to a buyer that has a flagrant lack of any sense of fair play. Yes I am hurting by a decision made by you that meant I am left out of pocket by a considerable sum , because the buyer decided to not to return the item until it was too late for me to pursue a claim with the carrier, even though they had stated the item was in the post, and yet only returned it after ebay told them too 1 MONTH LATER. Your company worth Billions, forgets, or doesn’t care who put you there. Elaine. eBay Is Founded | World History Project Sep 3 1995 eBay Is Founded eBay Inc. is an American Internet company that manages eBay.com, an online auction and shopping website in which people and businesses buy and sell a broad variety of goods and services worldwide. The majority of the sales take place through a set-time auction format, but subsequent methods include a substantial segment of listings in the "Buy It Now" category.

In addition to its original U.S. website, eBay has established localized websites in thirty other countries. eBay Inc. also owns PayPal, Skype, StubHub, Kijiji, and other businesses. Ebay - Ebay Founded by Pierre Omidyar as AuctionWeb in 1995 Set up to trade Ebay Ebay - Ebay Founded by Pierre Omidyar as AuctionWeb in 1995... SCHOOL View Full Document Ebay • Founded by Pierre Omidyar as AuctionWeb in 1995 • Set up to trade Pez candy dispensers • Ebay’s initial business model was to provide an electronic infrastructure for conducting C2C auctions • It has close to 200 millions registered buyers and sellers now and offer fixed price listing and stores as well • products that ranges from high end items such as fine arts, collector automobiles, and jewelry to more mundane and practical items such as clothing, consumer electronics and housewares 1 This preview has intentionally blurred sections. Sign up to view the full version. World’s Largest Marketplace 3 This preview has intentionally blurred sections. Sign up to view the full version. View Full Document Business Model • Value proposition - connect sellers to buyers by providing a ease of use, safe and reliable trading platform.

• Bulk of its revenue from fees and commissions • Listing fee + commission + payment (if use PayPal) + shipping fee (if use their shipping service) • Additional fees for using pictures and “Buy it now” option • Own half.com which offers fixed-price C2C and B2C of goods. Charge 15% commission • Also derived revenue from direct advertising on the site 4 Business Strategy • World’s largest network of buyers and sellers – growth based on expansion geographically and scope • Has International ( MercadoLibre.com , eachnet.com) and local sites • Bought PayPal for $1.5B in Oct 2002 This preview has intentionally blurred sections. Sign up to view the full version. Pierre Omidyar - Academy of Achievement Pierre Omidyar I started eBay as an experiment, as a side hobby basically, while I had my day job. The World's Online Marketplace Date of Birth June 21, 1967 Pierre Omidyar was born in Paris, France to parents from Iran. He moved to Maryland with his family when his physician father began his residency at Johns Hopkins University Medical Center.

Pierre became fascinated with computers while still in high school and graduated from Tufts University in 1988 with a degree in computer science. After graduation, he worked for Claris, a subsidiary of Apple Computer, developing software for the Macintosh. In 1991, he co-founded Ink Development Corp. with three friends. The company included an Internet shopping segment and was later renamed eShop Inc. Omidyar worked as a software engineer for eShop until the end of 1994, when he became a developer services engineer for General Magic, a mobile communication platform company. In 1996, eShop was sold to Microsoft, but Omidyar remained fascinated by the technical challenges of online commerce. 1998: Pierre Omidyar, founder of eBay. By May 1997, Beanie Babies, Ty Warner’s line of stuffed animals, take the world by storm. $500 million worth are sold on eBay alone, representing more than 6% of eBay’s total volume. While living and working in the San Francisco Bay Area, he met and married Pamela Wesley, a graduate student in biology who later embarked on a career as a management consultant.

In a much repeated story, Omidyar originally created an online auction site to help his wife trade and collect Pez candy dispensers, but in his interview with the Academy of Achievement, Omidyar derides the story as “media-enhanced.” Other eBay spokesmen have since described it as a publicist’s fabrication. In fact, Omidyar was already intrigued by the technical problem of establishing an online venue for direct person-to-person auction of collectible items. He created a simple prototype on his personal web page, and launched an online service called Auction Web as a sole proprietorship on Labor Day weekend in 1995. The first item sold on the site was not a Pez dispenser, but a broken laser pointer. Omidyar was astonished that anyone would pay for the device in its broken state, but the buyer assured him he was deliberately collecting broken laser pointers. Similar surprises followed. The business exploded as correspondents began to register trade goods of an unimaginable variety. Omidyar incorporated the enterprise; the small fee he collected on each sale financed the expansion of the site. The revenue soon outstripped his salary at General Magic, and Omidyar decided to dedicate his full attention to his new enterprise.

Business expanded through word of mouth, and Auction Web added a Feedback Forum, allowing buyers and sellers to rate each other for honesty and reliability. From collectibles, the site quickly expanded into a vast range of saleable items, including furniture, electronics, home appliances, cars and other vehicles. In 1996, Omidyar signed a licensing deal to offer airline tickets online. In 1996, Auction Web hosted 250,000 auctions. In the first month of 1997, it hosted 2 million. By the middle of that year, eBay was hosting nearly 800,000 auctions a day. June 1998: Chairman and founder Pierre Omidyar and CEO Meg Whitman of EBay.com, the online auction service. Pierre Omidyar changed the company’s name to eBay in 1997 and began to advertise the service aggressively. He has served as chairman of the board since its incorporation. At first, he also served as chief financial officer, president and CEO, but he relinquished these positions one by one, the last when he hired former Hasbro executive Meg Whitman to serve as CEO in 1998.

At the time, eBay had barely 30 employees, half a million users and U.S. revenues of $47 million. By the time eBay went public that fall, the site had more than a million registered users. The share price nearly tripled on the first day of trading and Omidyar’s holdings made him a billionaire overnight. Council member and music impresario Quincy Jones presents the Academy of Achievement’s Golden Plate Award to Pierre Omidyar at the Hampton Court Palace during the 2000 International Achievement Summit in London. The rapid expansion of eBay’s traffic did not come without growing pains. In 1999 the company suffered a number of service interruptions, one lasting 22 hours, but Omidyar moved quickly to regain the confidence of the site’s customer base. The company made 10,000 phone calls to the site’s top users to apologize for the interruption and assure them that everything possible would be done to keep the site up and running in the future. As other online ventures fell victim to the dot.com bust of 2000, eBay continued to grow and prosper. Pierre Omidyar addresses the Academy delegates at the 2000 International Achievement Summit in London.

In 2002, eBay acquired the online payment processing firm PayPal, which it uses to process most of its online transactions, compelling many online sellers to employ the service. At the same time, eBay diversified its services, allowing sellers to engage in fixed-price and “best offer” sales as well as conventional auctions. Software developers can create applications to integrate into the site through the eBay Developers Program. In 2005, eBay opened a category for buying and selling surplus industrial machinery and business equipment. Many large companies now use eBay to set prices for their products and services. Pierre Omidyar serves on the Board of Trustees of Tufts University, The Santa Fe Institute and The Omidyar Foundation. In November 2005, Pierre and Pamela Omidyar announced their gift of $100 million to endow the Omidyar-Tufts Microfinance Fund. At the time, it was the largest gift in the history of Tufts University, as well as the largest private allocation of capital to microfinance by any individual or family. The fund, administered by the Board of Trustees of Tufts University, invests in international microfinance initiatives designed to empower people in developing countries to lift themselves out of poverty.

Ten years after going public, eBay had expanded around the world, employing more than 15,000 persons to serve a customer base numbering in the hundreds of millions, operating in 30 countries, with especially large presences in China and India. In 2004, the philanthropic investment firm Omidyar Network was established by eBay founder Pierre Omidyar and his wife, Pam. The organization invests in and helps scale innovative organizations to catalyze economic, social, and political change. To date, Omidyar Network has committed more than $992 million to for-profit companies and nonprofit organizations that foster economic advancement and encourage individual participation across multiple investment areas. In 2010, they established, along with Richard Branson, Enterprise Zimbabwe. Among other Omidyar family philanthropies, the Omidyar Network supports the creators of the emergency communication technology Ushahidi (Swahili for “testimony”), an application which allows users to create maps from data submitted by cell phone users.

Originally created in the violent aftermath of the 2007 election in Kenya, it has since been used to track damage from the oil spill in the Gulf of Mexico and to locate trapped survivors of the 2010 earthquake in Haiti. Crowdmap, a free user-friendly web-based version of the application is now available online, thanks to the support of the Omidyar Network. In 2010, Pierre Omidyar joined Microsoft founder Bill Gates and investor Warren Buffett on the list of 40 billionaires pledging to donate at least half their wealth to charity. In fact, Pierre and Pamela Omidyar have resolved, during a period spanning 20 years, to give away all but one percent of their fortune.

May 2013: Pierre Omidyar presenting an Omidyar Network Award to “Global Integrity, for the leading role they’ve played in catalyzing and convening the government transparency and accountability community.” (Michelle King) Recently, Omidyar has devoted himself to media and free-speech causes, and in 2014 he founded the investigative news outfit The Intercept, in which journalists including Glenn Greenwald, Laura Poitras and Jeremy Scahill cover national security and surveillance issues brought to light by Edward Snowden. He’s also become involved with movie production, and his film Spotlight won the 2015 Best Picture Oscar for its portrayal of the Boston Globe’s investigation into sex abuse by Catholic priests. In 2015, eBay had more than 265 million transactions during the holiday shopping season. Forbes magazine estimates Pierre Omidyar’s net worth at $8.1 billion. In 2016, eBay expects annual net revenues in the global marketplace of more than $8.5 billion.

Inducted in 2000 Date of Birth June 21, 1967 Today, Pierre Omidyar is hailed as the architect of a new age of digital commerce, but the founder of eBay, the world’s largest personal online trading community, became a web entrepreneur almost by accident. In 1995, he created the prototype for an online auction site as an experiment on his personal web page. Almost overnight, visitors by the thousands flocked to the site to trade collectibles and other goods, each of them paying Omidyar a small fee for the privilege. Today, eBay hosts millions of auctions a day, from sites based all over the world. Omidyar’s experiment became a publicly traded company and has made him a billionaire several times over. Pierre Omidyar and his wife, Pamela, plan to give away all but one percent of their wealth within 20 years. They have already endowed Tufts University’s College of Citizenship and Public Service, an initiative designed to “create a community of graduates who can combine successful careers with active participation in public service organizations for social and environmental causes, and politics,” while other Omidyar Foundation initiatives are providing emergency communications technology to disaster areas throughout the world.

Watch full interview October 27, 2000 Was the origin of eBay as accidental as we’ve read? Pierre Omidyar: The business success was, absolutely, but the birth of the idea is definitely a media-enhanced story. You mean the Pez candy? Pierre Omidyar: The Pez thing, right. Yeah. My wife — who was my fiancée at the time — whenever she hears about it she rolls her eyes. “Tell them I’m a management consultant. Tell them I have a master’s degree in molecular biology. I am not just this little Pez candy collector.” That was part of the inspiration, but frankly it was a small part of it for me. At the beginning, I didn’t get the human side of it that that story really embodies, which is the most important asset. Keys to success — Vision The most important thing of eBay is the human side now. At the beginning I didn’t get that. For me it was an experiment. It was like I said, I wanted to create an efficient market where individuals could benefit from participating in an efficient market, kind of level the playing field.

And I thought, “Gee, the Internet, the web, it’s perfect for this.” This is more of an intellectual pursuit, you know, than anything else. It was just an idea that I had, and I started it as an experiment, as a side hobby basically, while I had my day job. And it just kind of grew. Within six months it was earning revenue that was paying my costs. Within nine months the revenue was more than I was making on my day job, and that’s kind of when the light bulb went off. “Knock, knock, knock. You’ve got a business here, do something about it.” So that’s when that really started. Pierre Omidyar, the founder of eBay, became a billionaire at the age of 31 with eBay’s 1998 initial public offering. You made an interesting distinction between the human side, as opposed to solving a technological problem. Pierre Omidyar: Right. Absolutely.

Keys to success — Integrity If you think about it, commerce and trade is at the base of all human activity, and it’s a bit of an exaggeration, but I like to talk about, you know, in the old days people would bring their stuff to market and they’d do business and then they’d go back to their hillside homes or wherever. And eventually they were doing this enough that you had to build a wall around them to protect them, and that was the birth of cities and so forth. And again, gross generalizations and simplifications, but fundamentally everything we do in human activities is related to trade and there’s something, I think, that’s wired in human beings that drives us to commerce. I’m not sure what it is exactly, but the human side. So that’s the human side I’m referring to. With eBay it became apparent very quickly, because in order to do a trade — a transaction with someone — you actually have to get to know that person and build a trusting relationship first. So you have to build trust before you will enter into a transaction. And so in order to build trust you have to communicate.

You have to get to know one another, and so very quickly I started getting letters about — actually some of the early letters were more negative. They were, you know, “This guy is a jerk,” kind of thing, and I said, “Okay, there’s some human element to that I wasn’t expecting. Please be nice. You know, not everyone is a jerk. Maybe there’s a misunderstanding. Give people the benefit of the doubt.” But you know, so very, very quickly I learned that it was actually the human element that was really driving it more than the commerce. So that was very interesting. 1998: Portrait of eBay online auction site founder Pierre Omidyar. (Photo by Acey Harper/Time Life Pictures/Getty) Could you ever have imagined how big eBay became and how fast? Pierre Omidyar: Absolutely not. For the first, I think, three years — at least the first two full years of our history — we grew at 20 to 30 percent every single month and I don’t think any other business has seen — I mean, every business in the start-up phase sees that kind of growth for a short period of time, but for such an extended period of time!

And so as we were doing projections in terms of, okay, so this is what we’ve seen in the past, what can we project for growth next year, next quarter or whatever, so we can do budgeting and all that, we would only say, “Well, this can’t last, you know, this can’t last. There’s no way you can grow this fast.” So clearly there’s no way I anticipated it, and even as we were growing — even with smart people — and I finally hired business people to actually look at this thing, everyone was saying, “No, no, there’s no way it can continue to grow this fast.” But it has, which is remarkable. May 21, 1999: eBay CEO Meg Whitman, left, and Pierre Omidyar, eBay’s Chairman of the Board, leaf through a magazine at the company’s headquarters in San Jose, California. Omidyar, eBay’s founder and Chairman, and his wife, Pam, have donated $50 million to the Hawaii Community Foundation. The Omidyars and their three children moved to Hawaii in 2006.

He attended eighth and ninth grades at Punahou School, where President Barack Obama graduated from in 1979. Pam Omidyar grew up in Hawaii Kai. (AP Photo/Randi Lynn Beach) Along the way, inevitably there are detours, there are disappointments, there are failures. If you have not suffered those, maybe the right question for you is not, “How do you deal with failure?” Maybe the right question is, “How do you deal with success?” Pierre Omidyar: I’ll tackle both sides of that question. I knock on wood every time I think about it, because I think we were really blessed with a great community of people that embraced the idea and embraced the values. It’s all about treating each other the way you want to be treated yourself so that you can do business with one another. The business just grew on its own, and we just had to get out of the way and let it grow. I know that the job of a typical entrepreneur is a lot harder than that, because I had done that before. I was a co-founder of another company before eBay. So we had it a lot easier than most.

When we went to raise money, rather than trying to convince people to invest in eBay, we had to tell people to stop knocking on the door. We had our selection and we made a choice and found a strategic partner, and we took their money and we put it in the bank and we never touched it. It’s been mostly success, especially in the early days of eBay. The enormous growth and success brought a lot of challenges, too. Keys to success — Perseverance You can’t predict growth and success — no one in their right mind would predict 30 percent growth for another year every month — I mean, monthly growth for another year. So we were behind on a lot of things and a lot of the infrastructure, and we had some fairly public failures in the middle of ’99, and where our systems went down for 22 hours, and then went down for eight hours after that. And we had a very large community then. Not as large as today obviously, but still very large, front page news. We had CNN satellite trucks in the parking lot. I mean, it was big, big. “The world is watching, this company is gone.

It’s going away.” And I think failure of that magnitude, or a challenge of that magnitude, is really important, and I’m glad that we faced it so early in our evolution, because Meg, who is the CEO — I brought on Meg in March of ’98 — she really woke up to the fact that infrastructure and technology was critical, and just really built that organization out over the next — it was a six- to nine-month process for us to kind of get over that. And so I think those challenges are also really critical and really important. And what you learn from them is, of course, kind of what they say, “If it doesn’t kill you, it makes you stronger,” and it’s true. And what you learn from those challenges and those failures are what will get you past the next ones. March 8, 2007: Pierre Omidyar and Richard Branson, billionaire founder of the Virgin Group. In 2010, Branson established the philanthropic venture Enterprise Zimbabwe with the Nduna Foundation and Humanity United. Did you have any doubts? Did you have fears of failure?

Keys to success — Courage Pierre Omidyar: I was the pretty consistent bull and the cheerleader on eBay actually. I just felt — once I realized the human connection that people were making with one another over the service — I just knew that there’s just nothing that can happen that can make it go away. And even after a massive outage like that, you really anger your community, they are depending on — a lot of them are dependent on us at that time for their livelihood and still do today — so it’s really a hardship. Even after that, they come back and they say, “Okay, well, we know you’re doing your best. We’re with you.” And so I’ve always had, you know — I’ve always had kind of this unshakable faith that it’s going to endure. Since 2010, Pierre Omidyar has been involved in online journalism as the head of an investigative reporting and public affairs news service called Honolulu Civil Beat. In 2013, he announced that he would create and finance the First Look Media, a journalism collaboration with Glenn Greenwald, Laura Poitras, and Jeremy Scahill.

A second publication was announced in 2014 that would focus on financial and political corruption headed by Matt Taibbi. Is eBay the Silk Road of the 21st century? Is this how we are going to do business? Pierre Omidyar: I hesitate to say that eBay or the Internet is the way all business is going to be done, all business is going to move to electronic commerce. Not at all. You still want to go to the mall, and you still want to socialize there. There’s a definite value and a reality to the real world experience. What eBay did really was to create a new market, one that wasn’t really there before. And that was a global market for the kind of goods that were usually traded at flea markets and garage sales and this kind of thing, and that was the format. That was the start of it, and it hadn’t existed before, and now it has progressed past that into consumer electronics, computers.

You know, a lot of people don’t know that, and I’ll put a plug in for my business here, but they don’t know that kind of every category that we’re in — in addition to collectibles — we’re the number one leader in terms of the dollars traded in that category on the Internet, except for books and music because there’s another company that’s pretty good at that. But I mean consumer electronics, computer equipment, sporting goods, everything, jewelry. It’s just unbelievable. So that base of — kind of the flea market base — has really evolved into a market for pretty much everything. That raises another question you’ve had to deal with, and that is your responsibility for what is sold on eBay. It may be true that 95 percent of the people or more can be trusted. What about the other small percentage? Pierre Omidyar: I founded the company on the notion that people were basically good, and that if you give them the benefit of the doubt you’re rarely disappointed. And I’m thankful that, in fact, statistics have borne that out to be true. And it is actually 99.999 percent of our transactions happen without a case of reported fraud.

There are 30 cases out of every one million transactions where somebody actually goes to the trouble to report fraud, so presumably there’s some unreported level as well that’s higher than that and people don’t bother. But that is — there’s no word to describe it. It’s far more than a large majority or most, or whatever. I mean, it’s practically all transactions happen without a problem. Now, as the absolute number of transactions have gone up — this is another challenge that we faced — is that the absolute number of problems has also gone up, and so with the attention that is paid on the company — I mean, you can open the newspaper on any given day and read about the latest problem that’s related to eBay somehow. Whether it’s some kind of strange new item being offered on the site, or an illegal item or whatever. And so we’ve had to evolve our strategies and our policies from what I built in the beginning, which was a self-policing community of people, to one where we take a more active role in trying to help identify the bad actors. We work with the authorities to go find them and make sure they don’t come back and this sort of thing.

But nothing yet has shaken your faith in human nature? Pierre Omidyar: No. This is the first time we have statistical proof. It’s a wide open marketplace, and yet only 30 out of one million transactions! And it’s amazing, that ratio has stayed true since we first started measuring it in January of ’98. It was like 27 that month. So even as the number of transactions has exploded, that ratio is still true. What about the other issue that has come up, in terms of the goods and collectibles that are transacted on eBay? Whether it’s AK47s or pornography, what is your responsibility for that and what do you do about it? Pierre Omidyar: The founding standards again, were that it was a self-policing community and the community would decide for itself what was appropriate and what was not appropriate. And I created a system of the feedback forum, which I’m very proud of because it has been copied gazillions of times and it was my idea. It allows people to kind of rate each other and give feedback on how their transaction went.

And if they don’t like something that somebody is doing, and enough people don’t like it, that person is automatically kicked off of the system. That worked very well in the early days. As we grew, and the community became more diverse, we found that there are certain categories of goods that the majority of the community just didn’t want to see. Even though it’s protected, or even though it’s legal. First of all, illegal goods were never allowed on eBay. Never. Legal but questionable goods we’ve had to be more active on, and you mentioned AK47s. Firearms, for example, we decided a while back, I think in ’98, pretty early on to — actually I’m not sure about the date frankly, but we decided to remove those from the site, to say, “You know what, eBay is no longer an appropriate venue to trade firearms.” And the reason is that the regulations in all the states are so different and so varied that it was hard.

It was very easy for a member to accidentally trip over a regulation, and we didn’t want them to get into trouble, and at the same time, frankly, Meg’s point of view was if somebody buys a gun on eBay and uses that to harm somebody, we don’t actually want that. So in her mind she was uncomfortable with it, actually from the day she joined the company, so we got rid of that. Adult items is another interesting issue. We actually surveyed our members once, a while back in a broad survey about a number of things, but it turned out that we asked whether or not this category — this adult category should be removed, because there is an adult category on eBay that is segregated from the rest. And 70 percent of them said, “No, keep it.” This was a general broad survey, you know. So we think community standards have to be respected, and as long as we segregate this category away from minors — not only minors, because minors aren’t supposed to use the site anyway — but we prevent a minor from even viewing the items, then I think we’re doing a good job there and addressing that concern. Where did you grow up, and what you were like as a kid?

Pierre Omidyar: I was born in Paris, Paris, France. I lived there until I was six years old actually, and I went to bilingual school as I was growing up during that period so I learned English. And at age six moved to the United States, moved to the east coast of the U.S., Washington, D.C. area, and grew up in the D.C. area actually through high school. I had a brief stint actually in Hawaii in junior high school, eighth and ninth grades. Then back to the Washington, D.C. area, college in Boston and then after college moved to California. That’s kind of a resume of where I’ve been. The longest I was in one place was in college, four years. Before that it was the last three years of high school. Before that we were moving every two to three years. I wasn’t part of a military family, which is usually the cause of that. It just kind of happened. How did that affect you? All that moving around when you were growing up? Pierre Omidyar: I didn’t really realize until we moved after ninth grade — which was my last year in Hawaii — that I had missed people.

In eighth and ninth grade, I had finally started to make some close friends in school, and leaving after ninth grade was kind of tough. It was tough for me personally. Before that it was just what I knew. It was the way I was raised and it was fine. There weren’t a lot of kids around, and when I was younger I ended up hanging out with adults a lot more, because I had to. In retrospect I may have been cheated a little bit on the childhood side. I kind of grew up very quickly and became a little more mature more quickly than I see some of my relatives these days. How would you describe yourself as a kid? Pierre Omidyar: I was actually interested in gadgets, little electronic gadgets. Whether it was calculators — actually I remember early on going out shopping for a calculator — and this was when calculators were like $100, you know, I mean — and with my dad, I think. And so I was always fascinated by these little gadgets and I always managed to break them for one reason or another, of course, as kids do, and then I would take them apart and try to fix them, which I was never able to. Do you recall early influences in your life?

Who was important to you? Pierre Omidyar: I think it’s both my mom and my dad. They were separated when I was two, I think, but my dad was always part of my life. I lived with my mom, but my dad was always around. I remember when I was younger spending weekends with my dad, who is a surgeon and a medical doctor, doing rounds with him. We would spend maybe 45 minutes in the car going from one hospital to the next and we’d have some great conversations. That’s one of my fond childhood memories. What did you talk about? Pierre Omidyar: My dad still does have a fascinating kind of grasp of all things, and we’d talk about history and art. When I say conversation, that’s not quite accurate. It was mostly one way. Now that I’m older — I’m 33 now — I think if I was in his shoes I’d think, “This kid isn’t hearing anything I’m saying,” from my reaction. It’s funny now that I look back on it, it was a precious time for me. Were you a good student?

Pierre Omidyar: I was one of these guys that didn’t really study, so I don’t think I was a good student. I am very proud to say that I graduated from Tufts University with better than a 3.0 average. It was actually 3.01. During my entire four years there at Tufts my GPA improved every single semester, which gives you an idea of where I started. No, I was not a good student. Were there any subjects you were particularly interested in? Any books that influenced or were important to you? Pierre Omidyar: I’ve been asked before, “Who are your heroes?” and these types of questions. I always find it hard to identify a single person or a single book or this sort of thing. I’ve always been forward looking. I was raised with the notion that you can do pretty much anything you want. You’re able to accomplish anything you set out to accomplish. I was given a sense of confidence and I never really felt the need to — or I’ve never had the benefit, I should probably say — of being inspired by outside heroes. From early on you were interested in gadgets, including computers. How did this first manifest itself?

Pierre Omidyar: I’ve always been into the gadgets and I guess when I first saw a computer — I’m trying to think if it was third — it might have been third grade. It was pretty early on actually and it was an early TRS-80, you know, Radio Shack. Kind of the original Radio Shack TRS-80 computer, 4K of memory. I think this one had the 4K or the 8K expansion module, which was like as big as a desk, you know, and learned how to program Basic on it. And I used to actually cut gym and sneak into the computer room — which wasn’t really a room, it was a closet where they kept the computer between classes — and played on the computer. Did you pass gym? Pierre Omidyar: Good question. I don’t know if I failed gym or not. I don’t think I failed. It sounds like even then you were kind of entrepreneurial. Pierre Omidyar: I always kind of just went ahead and tried things and one of the things I learned later — you know, more kind of professionally — is that a lot of people don’t just go ahead and try things.

They’ll have an idea and they’ll say — they’ll convince themselves or other people will convince them that it can’t be done. You know, one or the other. Actually I think that the first is even more dangerous and more serious. It’s convincing yourself that it can’t be done. And I never learned that for some reason, so I just kind of had this naive approach to — well, gee, you know, why not. I’ll just go ahead and do it. We’ve read that early in high school you wrote a program to print catalogue cards at six bucks an hour. Was that your start? Pierre Omidyar: That was my professional debut. Six bucks an hour. And it’s funny too, thinking about it, because it was using computer technology to print out library cards for the card catalogue. And so all it was, was a program to just format. You know, somebody would type in the information and it would format it the way the librarian wanted, so they could put the cards into the card catalogue. So this is incredibly basic computer technology. This is no database there. No search engine, nothing like that. But yeah, six dollars an hour.

And also, at that time I also worked on the software to help schedule classes, which was key. This was in high school at tenth or 11th grade, I think, when I was working on that, and I resisted the temptation to put in some code in there to make sure I never had classes on Friday, because I wouldn’t have been able to get away with it, but I thought about it. Was there ever any doubt in your mind that computer science was what you wanted to do? Pierre Omidyar: I always wanted to be involved with computers. My original kind of career choice, what I thought I was going to do was more computer engineering, which was, I thought — you know, figure out the hardware and the software and combine the two to learn about computers. When I got to college at Tufts I was accepted into the engineering school to do an electrical engineering and computer engineering program. I learned quickly there in my first semester — actually my second — well, I learned very quickly that the engineering program was a little bit too rigorous for me. I took a class. I took a chemistry class, and I think that was second semester of freshman year, because it was required for the engineering program, taking chemistry.

I had no interest in chemistry. And I had worked — I worked so hard for that class trying to understand what was going on and study for the test and everything, and did so poorly. I remember for the mid-term I had studied harder than I had for anything else and got 25 out of 100 on the test. And it was at that point I said, “You know what, this is kind of ridiculous.” So I transferred out of the engineering college and went to liberal arts and just did the pure computer science. What else do you recall from college in terms of influences and life-changing experiences or ideas? Pierre Omidyar: When I was in college I taught myself how to program the Macintosh. A big foundation actually for that was a class. It was actually — so it wasn’t completely self-taught — it was a C programming class called “Data Structures.” It was the big kind of the “weed-out” class for the computer science program. I learned how to program C. A great, great professor. Probably one of the best I’ve ever had, and a couple of things stem from that story. The first is that that professor eventually had to leave the school.

He was a great teacher but apparently he had never published anything, and so they axed him. He had to leave and that was a scandal, at least in my mind. So I don’t know what exactly that taught me, but it did have an impact on me and — yeah. And then second, you know, I learned how to program C, and then I used that ability to teach myself how to program the Macintosh which I was just very excited about learning everything I could about it. And of course, that’s how I began actually my professional career was after college — actually a year before graduating from college — I took a summer job in California working at a software company for the Macintosh. Did it enter your mind at that point in your life what was going to happen? Pierre Omidyar: No, no, no, not at all. I was just pursuing what I enjoyed doing. I mean, I was pursuing my passion. And the whole — you know, the ability to create software that could have a benefit or an impact on people that used it was what was driving me. And so I was driven by, you know, mass market software and the whole notion of just being able to do neat things.

And like most software people, it is very much a passion more than anything else. And so, like people have said, it is not really work, you know, if you are having fun, it’s not work so that was the case with me. What do you think motivates you to do what you do? Pierre Omidyar: I’ve got a passion for solving a problem that I think I can solve in a new way. And that maybe it helps that nobody has done it before as well. I mean, we always have — you know, there’s a sense of pride of doing something brand new, and I’m particularly inspired by problems that seem easily solvable. Not the difficult problems that some of the physicists that are here, for example, are talking about, but problems that seem easily solvable, that no one has bothered to attack because they think it’s impossible, you know. And so with eBay, the whole idea there was just to help people do business with one another on the Internet. And people thought it was impossible because how could people on the Internet — remember this is 1995 — how could they trust each other? How could they get to know each other? And I thought that was silly.

You know, it was a silly concern because people are basically good, honest people. So that was very motivating. It was, “Gee, I’ll just do it. I’ll just show them. Let’s see what happens.” What do you say to a young man or woman who comes to you for advice and says, “I want to do what you did”? Pierre Omidyar: Well, if they say, “I want to do exactly what you did and compete with eBay,” I say, “Don’t bother. Don’t quit your day job.” That’s pretty rare. I love actually coming to these kinds of venues where I talk to students and young people because they are very passionate and they have great ideas. And, what I tell them is a number of things. I say that you should pursue your passion. If you’re passionate about something and you work hard, then I think you’ll be successful. If you start a business because you think you’re going to make a lot of money at it, then you probably won’t be successful, because that’s the wrong reason to start a business.

You have to really believe in what you’re doing, be passionate enough about it so that you will put in the hours and the hard work that it takes to actually succeed there, and then you’ll be successful. When you look at the accomplishments of accomplished people and you say, “Boy, that must have been really hard,” you know, when you look at something that looks hard, that was probably easy. And conversely, when you look at something that looks easy, that was probably hard. And so you’re never going to know which is which until you actually go and do it. So just go and do it, try it, learn from it. You’ll fail at some things, that’s a learning experience that you need so that you can take that on to the next experience. And don’t let people who you may respect and who you believe know what they’re talking about, don’t let them tell you it can’t be done, because often they will tell you it can’t be done, and it’s just because they don’t have the courage to try. One of your former colleagues at Microsoft said that it surprised him that you made this fortune. Why would he say something like that? Pierre Omidyar: It’s funny.

I laugh because after the article came out he sent me an e-mail and he said, “I’m really sorry. That’s not what I said. It wasn’t supposed to come out that way,” and he felt really bad about it. I didn’t actually think it was that big a deal. I guess he thought it was a bit insulting or something. Can nice guys make it in the business world? Pierre Omidyar: That’s a very kind way of phrasing that question, and I appreciate that. I think nice guys can make it. Especially in my business, eBay, which is all based on people doing business with one another. What I tell people all the time about eBay is that it’s not like a retail experience. If you think about a retail environment, where people are buying things in a retail environment, the retailer has a whole bunch of control. They choose the products. They design the store or the catalogue. They train the salespeople. They control the experience. And if there’s a problem with a salesperson, they retrain and so on and so forth. At eBay, our customer’s experience is based on how one customer interacts with another customer, okay, and you can’t control customer behavior.

So the only thing you can do is have a certain set of values that you encourage people to adopt, and the only way your customers are going to adopt those values is if they see that you’re living those values as well. So when I say that I believe people are basically good, it’s because I believe people are basically good. I mean, it’s not something that I came up with for eBay. And if I say that you should treat people with the benefit of the doubt, it’s because I believe in that as a way of life. And we have to do it internally at eBay at the company as well, because if we don’t, then eventually that seeps through, and customers will see that and that will harm our business, because we can’t control customer behavior. So our business is based on that. That’s a long-winded way of saying that “nice guys,” a responsible company that has its heart in the right place — that’s run by real human beings — it has to be successful, because if we weren’t that way, eBay would not be successful, eBay wouldn’t exist. It would not be possible. Do you have some idea of what you’d like to do next? Where do you go from here?

Pierre Omidyar: The big opportunity that I see now is shepherding this wealth that has been created into our philanthropic goals. Those goals have to do with rekindling a sense of the community, reminding people that it’s important to be part of your community and there’s a benefit that comes with being part of your community. That’s something that in America we have lost a little bit, but the value is still there. The core values of community are still there in America, and they just need to be rekindled a little bit. What are the responsibilities that go along with the kind of success you’ve had and the kind of wealth you’ve been able to accumulate? Pierre Omidyar: I look at it as a deep and heavy responsibility, in fact, to make sure that that wealth goes to good use, because it’s very simple. An enormous amount of wealth has been created in this business, even in my business, and it is unmeasurable. My personal wealth is far beyond what any normal human being will ever need in their lifetime for themselves, for their family, for their descendants for generations. You know, a small, small piece of what I have is enough for that.

And so the rest of it, I don’t want to see it go to waste. So I have a responsibility to make sure it’s put to good use. And you know, I feel I’m benefiting from the market success of a great business that has been built by regular, ordinary people who are logging on every day and doing business with one another. And you know, that’s something that I have to give back. I have to do it. I have to make sure that that wealth is put to good use. It’s a learning process for my wife and I as we think about that. We have 50 years ahead of us hopefully, at least as philanthropists, so we’ve got a long-term horizon. All of the money and the jobs and the opportunities that have been created by this revolution, what are some of the dangers? What are some of the pitfalls that have gone along with this dot.com revolution? Pierre Omidyar: There are a number of issues. Definitely the Internet is changing everything, and has changed the world in such a short period of time, and will continue to change things in very positive ways that we have yet to anticipate.

At the same time, if you look at it in just this last few years of time, the market has gotten away from itself a little bit. A lot of businesses were created that should never have been created, that should never have been funded, that should never have been brought to the public markets, and it created an impression that it was really easy to make a lot of money with a stupid idea. So a lot more people said, “Gee, great. It’s working for that guy so I should come in and do the same thing.” Just a few years ago, MBA graduates were going into consulting jobs and the like, now they’re all starting their own companies. Some of that is a good thing. I want people to try it. I want people to be entrepreneurs, but I want them to do it for the right reasons, because they think they can change the world, because they think they have got something of value to give to the world. Not because they think they can make a lot of money. That is the wrong way to do anything. There has been a bit of a negative effect on Silicon Valley, in particular. We left Silicon Valley. We don’t live there anymore partly for that reason.

It has created a bit of a negative effect with consumers as well, in that it has created unrealistic expectations in some cases. The expectation that a valuable service should be provided free of charge, and in some cases that a valuable service should be provided only if the service provider pays you as a customer, so it’s worse than free. So it’s some crazy things like that. It’s going to take some time to unwind and recover from that. What do you think about the impact of the Internet boom on the communities in which these companies operate? Pierre Omidyar: Yeah. You know, in Silicon Valley it is — I think there has been a big problem in the last few years. Public servants like police officers and firemen, teachers and so forth cannot live in the communities that they serve. They can’t afford to own a home, much less even rent a home in those communities. They drive two hours to get to work every day. And when you have your community beat cop police officer, you know, not being a part of your community, that’s bad. That really hurts. Not to mention other — you know, other service workers and, you know, other lower wage earners that have just had to leave. That’s a problem.

That’s a serious problem. Looking ahead into the 21st century, what do you see happening in your field? Pierre Omidyar: I’m very excited by the prospect of what we haven’t seen yet. The web was invented in ’93. People graduating from college this year entered college with the web. In just a matter of years people graduating from college will have entered high school with the web, and it will have existed as part of their being. I’m too old for that. I grew up in the software world. I grew up in a technology environment but it was all about building software packages that can solve people’s problems and change the world. Now kids are growing up and going into the work force with the background of growing up with the web, with a global communication medium that is interactive, that people can congregate around. I think it is exciting to see what kinds of ideas they will come up with, things the world has never seen before. That is what I’m waiting for. What are your hopes for this world, as you look ahead, beyond what you do? Pierre Omidyar: Beyond technology? It very much dovetails with what we are trying to do with our philanthropy.

If we can help people reconnect with their communities, I think we can work together as a global community and solve the world’s problems. You know, it’s a bit idealistic, but we’re really looking for second order effects in what we’re doing. In other words, if we can just get people to just reconnect with their community. Just realize that you’re an individual, but you have a responsibility to be part of your community, and that responsibility is not just a burden, but it also comes with benefits that are real tangible benefits that you’ll see, being a part of that community. Then just think, if everyone thought like that, you could actually tackle local community problems, homelessness, health care. I mean, just serious problems, and you could tackle global problems as well, because we now have — again we have a global communications medium, and communities are being built, not just in the real world but in the virtual world as well. So I’m very hopeful that the reconnection with community that I — actually, frankly, I first became passionate about it because of eBay — because I saw it happen on eBay, I am very hopeful that that reconnection is going to dramatically improve the world.

If eBay had not happened, what would you be doing? What would have become of you? Pierre Omidyar: I wouldn’t be having as much fun. That’s for sure. Thank you so much for taking the time to talk with us today. Of course. Thank you. ebay, Inc., the Internet auction company, was founded in 1995 | Solution Inn symbol . . . . . . . . . . . . . . . . . . . . . . . . . . . . . “EBAY” The stockholders’ equity prior to the IPO showed a balance of approximately $9 million, including contributions from a variety of venture capital firms and individuals. a. Why did Omidyar incorporate the business in 1996? b. If Benchmark Capital sold its interest in eBay shortly after the IPO, how much was its gain? c. How much was the underwriter paid for underwriting eBay’s IPO? d. What percent of eBay’s voting stock did public shareholders receive on the IPO date? e. What percent of the shareholders’ equity did the public shareholders supply to eBay as of the IPO date? f.

How much unrealized gain does Omidyar have in eBay stock today, assuming that no stock has been acquired or sold since the initial purchase at incorporation? Use the Internet to find eBay’s current stock price to answer thisquestion.

Question: Which internet company was founded by Pierre Omidyar in 1995?
Answer: eBay