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Interesting article overall, but one clueless sentence amused me: "Meg Whitman grew rich by developing an online marketplace, eBay, where people could buy and

Interesting article overall, but one clueless sentence amused me: "Meg Whitman grew rich by developing an online marketplace, eBay, where people could buy and sell without ever meeting." I recommend the book Paypal Wars. It was written by one of the "Paypal mafia." The book goes into quite a bit of detail about the early Paypal-eBay story, with an epilogue covering events until 2006. The reality is exactly the opposite of what the article claims. Under Pierre Omidyar, eBay was a nimble start-up, and by the time Whitman came in, had established such a lead that the network effect was sufficient for them to retain their monopoly in the online auctions space no matter what. Whitman brought a culture of suits, endless meetings and powerpoint presentations into the company and quickly transformed it into a beast that moved at a fraction of its former speed. The new eBay took years to effectively integrate the payment system BillPoint which they purchased; if they had moved quicker, Paypal couldn't have survived, since they depended very heavily on eBay at the time. The corporate culture-shock that the Paypal employees experienced upon being acquired by eBay, and their consequent mass exodus is now famous. If there is one positive thing that came out of the Whitman years at eBay, it is the fact that the Paypal people dispersed and went on to do great things and truly change the world :-) Ironically, it was only around the time Whitman finally departed last year that it became clear that eBay was ripe for disruption. It amuses me that most of the business world, knowing none of the back-story, will think of the Whitman years at eBay as a glorious success.

thaumaturgy 18y ago
This will become important to know as Whitman is running for Governor of California in 2010.
moe 18y ago
Thanks for providing that insight. I read that story in an online article sometime ago - and couldn't sum it up better. Also I personally know a few people who work in an european eBay cubicle farm and can attest (through second-hand knowledge) to their abysmal corporate culture. Some of the stories I hear are straight dilbert material - and sadly that seems to be the rule, rather than the exception.
tlb 18y ago
It's unbelievably hard to unseat them. I knew the Yahoo Auctions team well back in 1998-2001, and they had a better product for free. Sellers and buyers preferred it. But there weren't many buyers because the sellers weren't there, and there weren't many sellers because the buyers weren't there. So even with Yahoo's network and brand they didn't win. (They did win big in Japan where eBay was slow to localize.) Auctions have worse lock-in than you'd expect. You might think, if there's a marketplace with X buyers and another with X/10 buyers, most sellers would make the effort to list in the X/10 marketplace because they can increase their sales 10%. But with auctions, the sales price is a strong function of excess demand. Those extra 10% sales would be at significantly lower prices, and eBay merchandise tends to have low margins. When sellers lost money they quickly left.
- zach 18y ago
  It's interesting that eBay does seem to be the first web auctioneer of any note. As many have pointed out, others sold books on the web before Amazon, there were many search sites before Google, etc. But eBay basically invented it and has held onto it. It has been said that Columbus wasn't the first to discover America, but he became famous for being the last. After his legend spread, none could again make that claim credibly to the public.

thaumaturgy 18y ago

This will become important to know as Whitman is running for Governor of California in 2010.

moe 18y ago

Thanks for providing that insight. I read that story in an online article sometime ago - and couldn't sum it up better. Also I personally know a few people who work in an european eBay cubicle farm and can attest (through second-hand knowledge) to their abysmal corporate culture. Some of the stories I hear are straight dilbert material - and sadly that seems to be the rule, rather than the exception.

tlb 18y ago

It's unbelievably hard to unseat them. I knew the Yahoo Auctions team well back in 1998-2001, and they had a better product for free. Sellers and buyers preferred it. But there weren't many buyers because the sellers weren't there, and there weren't many sellers because the buyers weren't there. So even with Yahoo's network and brand they didn't win. (They did win big in Japan where eBay was slow to localize.) Auctions have worse lock-in than you'd expect. You might think, if there's a marketplace with X buyers and another with X/10 buyers, most sellers would make the effort to list in the X/10 marketplace because they can increase their sales 10%. But with auctions, the sales price is a strong function of excess demand. Those extra 10% sales would be at significantly lower prices, and eBay merchandise tends to have low margins. When sellers lost money they quickly left.

zach 18y ago
It's interesting that eBay does seem to be the first web auctioneer of any note. As many have pointed out, others sold books on the web before Amazon, there were many search sites before Google, etc. But eBay basically invented it and has held onto it. It has been said that Columbus wasn't the first to discover America, but he became famous for being the last. After his legend spread, none could again make that claim credibly to the public.