The Birth of eBay and the Emerging Yahoo

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eBay started as AuctionWeb, and was founded in September 1995 by Pierre Omidyar, a computer programmer with a great love (since high school) of the Apple Macintosh platform. He had held several jobs, but at that time was working for General Magic, which was owned by several Apple geeks.

The first item auctioned and sold was a broken laser pointer which went to a “collector” for $14.83.  AuctionWeb was part of a personal holding belonging to Omidyar. At that time, his office was a converted upstairs bedroom in his small townhouse

He was born in Paris in 1967, an only child to French-Iranian intellectural parents (mother a linguist and father a medical professor) who emigrated to the US near Washington when he was 6. His undergraduate studies began at Tufts University near Boston in the mid-1980’s and were completed at the University of California – Berkeley when he moved west with his fiancee.

Basically Omidyar like many other Silicon Valley techies, was searching for a way to cash-in from the emerging World Wide Web and the Internet. His instincts told him there was huge potential to create wealth from the ideas he had for AuctionWeb.

With his beard, ponytail and glasses he was what I would call “an entrepreneurial geek”. Then there is the legend concerning the PEZ candy dispensers. Apparently Omidyar’s fiancee Pam Wesley and he were having dinner at home in Campbell, when she mentioned that as a collector of PEZ candy dispensers, since they moved west from Boston to Campbell, she was having trouble finding collectors to trade with. The result was that Omidyar looked to the Internet for ways to help her. The romancitized version of this story is that the future eBay was created at least in part, to resolve her
problem and make her happy.

Backtracking a little, Omidyar was on a small operational budget ($30.00 monthly) with AuctionWeb and ran the site as a hobby without charging fees, from his home using Best as his Internet service provider. However listings and traffic on AuctionWeb increased rapidly to the point where, in February 1995, Best complained that AuctionWeb’s traffic was slowing down their system, and subsequently charged him the commercial rate of $250.00 a month.

So Omidyar was forced to introduce fees, but decided to charge sellers only a “final-value fee” as a percentage of the selling price. At this time he still had his day job with General Magic.

In the background, dial-up service provider AOL and others were very busy signing up new Internet users. Stanford engineering graduates Jerry Yang and David Filo were having mind-blowing success with their new search engine Yet Another Hierarchical Officious Oracle which was such a “mouthful to pronounce” that they renamed it Yahoo.

Listings, Sales and traffic with AuctionWeb kept increasing to the point that Omidyar was compelled to hire Chris Agarpao as his first employee albeit part-time just to open envelopes and deposit checks.

He knew that he needed a suitable professional to come up with a proper business plan and strategies for further growth. So he formed an alliance with Jeff Skoll, an electrical engineer whom he had met previously.

Soon after that AuctionWeb’s office was moved to Skoll’s house because it had more space, though not large. After that there was a difficult period of finding a suitable but affordable address which allowed for expansion, but was as close as possible to Silicon Valley.

At that time Omidyar was still living at Campbell, and extremely busy promoting and adding modules such as feedback forum to AuctionWeb.

Revenue soon outstripped his salary with General Magic, so he left there to devote his full attention to the growth of his enterprise which included the consulting firm, Echo Bay Techology Group. He tried to register his chosen domain Echobay.com but found it had already been taken by a Canadian gold mining company Echo Bay Mines. So he shortened the domain to eBay.com in September 1997.

By the end of 1997, eBay was having 800,000 auctions a day. When eBay went public in September 1998, eBay had more than a million users registered and Omidyar became an overnight billionaire. Earlier that same year, Margaret Whitman became President and CEO, with Omidyar as Chairman.

I’m confused as to what happened to Skoll, some reports saying he was installed as President way back in 1995. Or did he just take his $billions into a new venture, bearing in mind that reports also claim that Skoll was partner in business, but that he and Omidyar were never actually best friends?

In 2008 Whitman resigned her position to enter politics and John Donahoe became the new President and CEO. At that time, eBay had expanded into many countries, the number of employees had jumped from 30 to 15,000, registered users numbered many millions, and revenue was about US$7.5 billion.

Interesting eBay acquisitions have included: PayPal (2002), Craigslist 25%, Gumtree, and Skype. I would not be surprised if eBay ventured further into social networking, and certainly into dropshipping and e-commerce. They have already been involved with ProStores and Doba a huge US wholesaler and dropshipper.

eBay has its Headquarters at San Jose which is the third largest city in California, and also has an office in Draper – Utah.

I’m not sure if eBay is still the fastest growing Company of all time, but globally it is the most popular online auction site.

PayPal has enjoyed exponential growth and now services more than 180 countries and territories. The popularity of ClickBank certainly would have enhanced PayPal’s expansion as a payment processor.

There have been certain years such as 2003 which have been quite significant to eBay, but those fascinating stories will have to wait to another post.

eBay Australia was launched in October 1999 as was eBay United Kingdom.

Hope you liked my little story and historical account of eBay happenings. I have tried to be 100% accurate with my research but can’t guarantee total truth.
Your friend and mentor,
Kevin Johnston

About the author

Kevin Johnston

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