eBay, Pez, and Immigration

We talk about a lot of immigrants in this podcast. There’s the Hungarian mathemeticians and scientists that helped usher in the nuclear age and were pivotal in the early days of computing. There are the Germans who found a safe haven in the US following World War II. There are a number of Jewish immigrants who fled persecution, like Jack Tramiel - a Holocaust survivor who founded Commodore and later took the helm at Atari. An Wang immigrated from China to attend Harvard and stayed. And the list goes on and on. Georges Doriot, the father of venture capital came to the US from France in 1899, also to go to Harvard.

We could even go back further and look at great thinkers like Nikolai Tesla who emigrated from the former Austrian empire. And then there’s the fact that many Americans, and most of the greats in computer science, are immigrants if we go a generation or four back.

Pierre Omidyar’s parents were Iranian. They moved to Paris so his mom could get a doctorate in linguistics at the famous Sorbonne. While in Paris, his dad became a surgeon, and they had a son. They didn’t move to the US to flee oppression but found opportunity in the new land, with his dad becoming a urologist at Johns Hopkins.

He learned to program in high school and got paid to do it at a whopping 6 bucks an hour. Omidyar would go on to Tufts, where he wrote shareware to manage memory on a Mac. And then the University of California, Berkeley before going to work on the MacDraw team at Apple.

He started a pen-computing company, then a little e-commerce company called eShop, which Microsoft bought. And then he ended up at General Magic in 1994. We did a dedicated episode on them - but supporting developers at a day job let him have a little side hustle building these newish web page things.

In 1995, his girlfriend, who would become his wife, wanted to auction off (and buy) Pez dispensers online. So Omidyar, who’d been experimenting with e-commerce since eShop, built a little auction site. He called it auction web. But that was a little boring. They lived in the Bay Area around San Francisco and so he changed it to electronic Bay, or eBay for short. The first sale was a broken laser printer he had laying around that he originally posted for a dollar and after a week, went for $14.83.

The site was hosted out of his house and when people started using the site, he needed to upgrade the plan. It was gonna’ cost 8 times the original $30. So he started to charge a nominal fee to those running auctions. More people continued to sell things and he had to hire his first employee, Chris Agarpao.

Within just a year they were doing millions of dollars of business. And this is when they hired Jeffrey Skoll to be the president of the company. By the end of 1997 they’d already done 2 million auctions and took $6.7 million in venture capital from Benchmark Capital. More people, more weird stuff. But no guns, drugs, booze, Nazi paraphernalia, or legal documents. And nothing that was against the law.

They were growing fast and by 1998 brought in veteran executive Meg Whitman to be the CEO. She had been a VP of strategy at Disney, then the CEO of FTD, then a GM for Playskool before that. By then, eBay was making $4.7 million a year with 30 employees.

Then came Beanie Babies. And excellent management. They perfected the online auction model, with new vendors coming into their space all the time, but never managing to unseat the giant.

Over the years they made onboarding fast and secure. It took minutes to be able to sell and the sellers are the ones where the money is made with a transaction fee being charged per sale, in addition to a nominal percentage of the transaction. Executives flowed in from Disney, Pepsi, GM, and anywhere they were looking to expand.

Under Whitman’s tenure they weathered the storm of the dot com bubble bursting, grew from 30 to 15,000 employees, took the company to an IPO, bought PayPal, bought StubHub, and scaled the company up to handle over $8 billion in revenue. The IPO made Omidyar a billionaire.

John Donahoe replaced Whitman in 2008 when she decided to make a run at politics, working on Romney and then McCain’s campaigns. She then ran for the governor of California and lost. She came back to the corporate world taking on the CEO position at Hewlett-Packard.

Under Donahoe they bought Skype, then sold it off. They bought part of Craigslist, then tried to develop a competing product. And finally sold off PayPal, which is now a public entity of its own right.

Over the years since, revenues have gone up and down. Sometimes due to selling off companies like they did with PayPal and later with StubHub in 2019. They now sit at nearly $11 billion in revenues, over 13,000 employees, and are a mature business. There are still over 300,000 listings for Beanie Babies. And to the original inspiration over 50,000 listings for the word Pe...