05/12/2021

085 – Auctions online – 1995

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A business leader has to keep their organization focused on the m
That sounds easy, but it can be tremendously challenging
in today’s competitive and ever-changing business environment.  Meg Whitman

Born in France, Pierre Morad Omidyar was six when his family moved to Maryland, USA.  He learned to programme in BASIC on a Tandy TRS-80, then switched to Apple computers.  He attended Tufts University and having graduated in computer science he joined Claris, involved in the MacDraw product.

1991 – He co-founded the Ink Development Corp developing software for GoCorporation’s PenPoint OS but this project failed.  Ink was renamed eShop Inc and developed solutions for Internet shopping, an eCommerce program and a virtual mall.  It was acquired by Microsoft in June 1996.

Omidyar realised he was more interested in the consumer-to-consumer market and moved in 1994 to General Magic.  Person-to-person trading had in the past been via classified adverts, garage sales and hobbyist events.  Omidyar saw a way to connect people in a new process via the Internet.

While still working for General Magic, over a weekend in September 1995 Omidyar launched Auction Web, an online auction site for consumers, initially specialising in collectibles and computer parts.

Sellers set a minimum price and buyers competed to outbid each other; in this way the seller got the maximum price.  Initially it was free but later he charged sellers to meet his costs; a basic listing fee and a percentage of the sold price were payable.  A notification stressed that the contract was between the seller and buyer and the transaction was completed offline.

Omidyar had previously sold consulting services as Echo Bay Technology Group.  He wanted to reuse this name but a clash meant his new service was named eBay.

The first auctioned item was a broken laser pointer selling at $14.83.  Omidyar called the buyer and learned that he collected broken laser pointers!  Revenues from the first month’s deals exceeded direct costs and the business was immediately self-funding.

Omidyar personally adjudicated disputes by email, then created the self-regulating ‘feedback forum’; users ranked and reported on deals.  His first recruitment was for someone to open all the envelopes from sellers and pay the monies into a bank.  When Chris Agarpao opened the envelopes $10,000 had accumulated.

1996 – Jeff Skoll was appointed eBay’s first president; Omidyar was the chairman.  The first partnership deal was agreed with Electronic Travel Auction for eBay to sell travel products, including air tickets.

1996 – the site handled 250,000 auctions; in mid-1997 it was hosting 800,000 auctions a day.  By January 2007 it had handled 2m.  During 1997 the millionth item was sold – a Sesame St. Big Bird toy.

January 1998 – Meg Whitman from Princeton and Harvard Business School became eBay president.   She served as president/CEO for ten years, reorganising the business, establishing partnerships with brands and supervising international growth, its IPO and its many acquisitions.

On her watch eBay grew from thirty employees, 500,000 users and $4.7m in US revenues to a staff of 15,000, hundreds of millions of users worldwide and revenues of $7.7bn.

Some remarkable sales have been achieved.  In May 2005 a Volkswagen Golf that belonged to Pope Benedict XVI when he was a mere cardinal sold for over $277,000.   The original Hollywood hillside sign was sold in November 2005 for $450k.  Michael Fawcett in NE England offered to sell a ghost, but eBay removed it, because they do not sell ‘intangible items’.

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