WEBVTT - eBay Makes Billionaires 0:00:04.160 --> 0:00:07.160 Get in touch with technology with tech Stuff from how 0:00:07.240 --> 0:00:13.720 stuff works dot com. Hey there, and welcome to tech Stuff. 0:00:13.760 --> 0:00:16.639 I'm your host, Jonathan Strickland. I'm an executive producer with 0:00:16.680 --> 0:00:20.239 how Stuff Works and I love all things tech. And 0:00:20.400 --> 0:00:23.200 in our last episode, I talked about how Pierre a 0:00:23.320 --> 0:00:27.320 Midier launched a web page over the Labor Day weekend 0:00:27.360 --> 0:00:31.160 in and he called it auction web. It was a 0:00:31.200 --> 0:00:33.920 site that was on a larger site, or a page 0:00:33.920 --> 0:00:37.159 that was on a larger site called eBay, and it 0:00:37.240 --> 0:00:40.560 all started off as something of a hobby for him. Eventually, 0:00:40.640 --> 0:00:44.279 to offset the hosting charges he was getting from his provider, 0:00:44.520 --> 0:00:48.240 A midi Are instituted a small fee for successful auctions. 0:00:48.560 --> 0:00:51.120 If the closing price on an auction was less than 0:00:51.120 --> 0:00:54.120 twenty five dollars, he would put in a five percent 0:00:54.240 --> 0:00:56.520 fee for the final bid, and if it was more 0:00:56.520 --> 0:00:59.200 than twenty five dollars, it was a two point five 0:00:59.240 --> 0:01:01.960 percent fee. It didn't take long for the site to 0:01:01.960 --> 0:01:04.800 start pulling in more money than what it costs to run, 0:01:05.160 --> 0:01:08.920 and suddenly this hobby had become an actual business. By 0:01:09.000 --> 0:01:13.080 mid nineteen, the auction site was earning a Midier enough 0:01:13.080 --> 0:01:15.280 money for him to quit his job and bring on 0:01:15.440 --> 0:01:20.119 Jeff's skull as the president of the company. In June, 0:01:20.360 --> 0:01:23.240 the net worth of all the goods sold over auction 0:01:23.280 --> 0:01:27.360 Web had hit seven point two million dollars. That's collectively 0:01:27.440 --> 0:01:29.960 across the history of the site, and this was when 0:01:30.000 --> 0:01:33.480 things were still pretty darn small. Every single month that 0:01:33.520 --> 0:01:36.480 went by, the company was growing by twenty to fift 0:01:37.440 --> 0:01:41.680 some months, marking a seventy five percent growth rate. In 0:01:41.720 --> 0:01:44.120 no small part this was due to a media are 0:01:44.240 --> 0:01:47.640 creating tools that allowed the community of auction Web to 0:01:47.760 --> 0:01:51.160 form around the site. Users could rate one another and 0:01:51.200 --> 0:01:54.000 were encouraged to do so with a gentle reminder that 0:01:54.160 --> 0:01:58.080 praise is just as valid a form of feedback as 0:01:58.080 --> 0:02:01.120 a complaint, and soon people were using the rating system 0:02:01.200 --> 0:02:04.240 to great effect. A midier was gratified to see that 0:02:04.240 --> 0:02:08.600 people were not immediately leaping to negative comments. A bulletin 0:02:08.639 --> 0:02:12.359 board helped community members get questions answered by other more 0:02:12.520 --> 0:02:17.480 experienced members of the community, and the community values were established. 0:02:17.880 --> 0:02:21.120 Those values are actually stated on the community site. I 0:02:21.160 --> 0:02:24.080 can cite them to you here. They are. We believe 0:02:24.200 --> 0:02:29.040 people are basically good. We believe everybody has something to contribute. 0:02:29.440 --> 0:02:32.720 We believe that an honest, open environment can bring out 0:02:32.760 --> 0:02:36.720 the best in people. We recognize and respect everyone as 0:02:36.720 --> 0:02:40.320 a unique individual. We encourage you to treat others the 0:02:40.360 --> 0:02:45.239 way you want to be treated. Back to Jeff Skull, 0:02:45.360 --> 0:02:48.640 who was the new president of the company, had a 0:02:48.680 --> 0:02:52.440 few things he wanted to tackle to make business operations 0:02:52.560 --> 0:02:56.520 run more smoothly and professionally. One of those was to 0:02:56.600 --> 0:02:59.880 move auction Web and eBay out of a Midiers home. 0:03:00.720 --> 0:03:03.720 Right now, the three people working for the company were 0:03:03.760 --> 0:03:07.240 meeting at his house and it just wasn't really working 0:03:07.280 --> 0:03:10.440 out the way Skull wanted it to, and it ended 0:03:10.520 --> 0:03:13.640 up being a harder thing to do than he had anticipated. 0:03:13.880 --> 0:03:17.320 The real estate market in San Francisco was pretty tight, 0:03:17.520 --> 0:03:20.760 especially for office space, and at first the team moved 0:03:20.760 --> 0:03:24.320 out of a Medier's house into Skulls home, which had 0:03:24.360 --> 0:03:28.520 more room but also had roommates. Then Skull, a Medier, 0:03:28.639 --> 0:03:31.880 and part time employee Chris Garpo moved into a very 0:03:31.919 --> 0:03:36.640 small office space over at the NASA Ames Technology Center. Eventually, 0:03:36.640 --> 0:03:39.560 the team found an office space at the gray Lands 0:03:39.640 --> 0:03:43.680 Business Park in Campbell, California, and they moved in. Now 0:03:43.680 --> 0:03:46.200 I'm gonna flash forward for just a second here. That 0:03:46.360 --> 0:03:51.040 office Suite number two oh five at Hamilton Avenue Technically 0:03:51.080 --> 0:03:54.960 in San Jose, California, is still a part of eBay. 0:03:55.240 --> 0:03:59.320 The company eventually purchased the entire office park, and that 0:03:59.360 --> 0:04:03.520 building is now called Music or Building number six. Each 0:04:03.600 --> 0:04:06.400 building on the eBay campus sports the name of a 0:04:06.480 --> 0:04:09.800 category of items you could list for auction on the site. 0:04:10.320 --> 0:04:14.280 Skull also wanted to update the look of the website. 0:04:14.440 --> 0:04:17.160 A Medier had built a functional site, but it wasn't 0:04:17.279 --> 0:04:20.960 much to look at, and Skull hated that auction Web, 0:04:21.240 --> 0:04:23.520 the one element that was bringing in all the money, 0:04:23.839 --> 0:04:26.599 was sharing a general website space with a page about 0:04:26.680 --> 0:04:31.279 Tufts University's alumni association and another about a biotech startup 0:04:31.279 --> 0:04:34.680 company where a Medeo's wife worked, and a third page 0:04:34.680 --> 0:04:37.800 about the Ebola virus. He wanted a Midier to remove 0:04:37.920 --> 0:04:41.320 all those elements and have auction Web be the only 0:04:41.440 --> 0:04:45.560 thing at eBay dot com. Initially, a Medier put up 0:04:45.600 --> 0:04:49.560 a defense. He said that Ebola information that page about 0:04:49.680 --> 0:04:53.359 the virus was highly ranked in search and likely drove 0:04:53.400 --> 0:04:56.520 a lot of traffic to eBay dot com. But Skull 0:04:56.600 --> 0:04:59.800 remained adamant, and eventually a Medier would give in pe 0:05:00.000 --> 0:05:04.080 we're already referring to auction Web just as eBay at 0:05:04.120 --> 0:05:07.080 that point, Skull argued, and to include it under an 0:05:07.160 --> 0:05:11.400 umbrella of such disjointed subjects was bound to cause confusion 0:05:11.480 --> 0:05:14.000 further down the road and to make it more challenging 0:05:14.040 --> 0:05:18.039 to form strategic partnerships and to get funding. Skull also 0:05:18.120 --> 0:05:22.240 wanted someone to handle all the customer support questions that 0:05:22.279 --> 0:05:24.599 were coming in because a medier had been doing that 0:05:24.640 --> 0:05:26.080 and it was taking up a lot of his time. 0:05:26.440 --> 0:05:29.120 So he looked through the bulletin board community and he 0:05:29.200 --> 0:05:32.520 noticed that one user who went by the handle Uncle Griff, 0:05:32.960 --> 0:05:36.800 was particularly helpful. But Uncle Griff hadn't posted much over 0:05:36.839 --> 0:05:39.560 the last couple of months, so Skull decided to reach 0:05:39.600 --> 0:05:41.640 out to this person and find out what was going on. 0:05:42.240 --> 0:05:45.200 That person turned out to be Jim Griffith, who had 0:05:45.240 --> 0:05:48.520 attempted to pursue a career as an actor but had 0:05:48.560 --> 0:05:51.680 not seen much success. He was then an artist for 0:05:51.720 --> 0:05:54.359 a while, and then he was in a really low 0:05:54.440 --> 0:05:58.800 place in nine and had been battling depression. He was 0:05:58.920 --> 0:06:01.279 on something of an swing when he got the call 0:06:01.400 --> 0:06:04.960 from Skull, which shocked him, and he got an offer 0:06:05.040 --> 0:06:09.760 to become eBay's second part time employee, Griffith, accepted the 0:06:09.839 --> 0:06:12.839 job and took on the handle Dale as his customer 0:06:12.960 --> 0:06:16.160 service identity for the company, and he was paid the 0:06:16.279 --> 0:06:20.640 princely sum of one dollars per month to answer emails 0:06:20.680 --> 0:06:22.640 and do what he did best on the bulletin board, 0:06:22.640 --> 0:06:25.919 which was to help people out. Skull would actually do 0:06:25.960 --> 0:06:29.040 this again, and he reached out to an antique store 0:06:29.080 --> 0:06:33.760 operator from Indianapolis named Patty Ruby. Patty had adopted the 0:06:33.800 --> 0:06:37.840 handle Aunt Patty on the auction Web bulletin board, and 0:06:37.920 --> 0:06:40.240 so she was known to the community and had been 0:06:40.320 --> 0:06:44.600 helpful on numerous occasions, being both computer savvy and knowledgeable 0:06:44.680 --> 0:06:48.400 about antiques. She too accepted the offer to work part 0:06:48.400 --> 0:06:51.080 time for the company, though she soon moved to working 0:06:51.120 --> 0:06:54.760 full time and she quit her normal job. Both Uncle 0:06:54.800 --> 0:06:58.000 griff and Aunt Patty are examples of how eBay would 0:06:58.080 --> 0:07:02.120 rely heavily on the community they've grown up around the service, 0:07:02.640 --> 0:07:06.280 rather than seeking professionals outside of the site. Skull followed 0:07:06.320 --> 0:07:10.000 his instinct and decided that the most passionate and helpful 0:07:10.040 --> 0:07:12.640 members of the community were the ones to tap. They 0:07:12.680 --> 0:07:15.720 would jump at the chance to come on board as employees. 0:07:16.040 --> 0:07:19.160 They already knew the auction web system backward and forward. 0:07:19.160 --> 0:07:21.600 They didn't have to have any training on that, and 0:07:21.640 --> 0:07:24.440 it was a move that just made sense. In November, 0:07:25.720 --> 0:07:29.760 eBay made the first of many third party licensing deals, 0:07:30.080 --> 0:07:33.680 and this was with a company called Electronic Travel Auction 0:07:33.880 --> 0:07:36.560 or e t A. And e t A wanted to 0:07:36.600 --> 0:07:39.360 create a way to allow users to bid for travel 0:07:39.400 --> 0:07:44.600 related goods and services like airline tickets, hotel rooms, vacation packages, 0:07:44.680 --> 0:07:48.560 and more. Now eBay still officially known as auction Web, 0:07:48.640 --> 0:07:51.840 though no one was calling it, that would host auctions 0:07:51.880 --> 0:07:54.960 not just from individuals or small business owners, but also 0:07:55.040 --> 0:07:59.360 from third parties, and that would continue throughout eBay's history. 0:07:59.560 --> 0:08:03.000 Now I've more to say about these middle days of eBay, 0:08:03.040 --> 0:08:05.760 but first let's take a quick break to thank our sponsor. 0:08:13.240 --> 0:08:15.800 The following year would be a big one for eBay. 0:08:15.840 --> 0:08:18.680 For one thing, it's the year that auction Web technically 0:08:18.920 --> 0:08:21.640 went away. This must have been a great relief to 0:08:21.720 --> 0:08:25.240 Jeff Skull. The design of auction Web was pretty simple. 0:08:25.440 --> 0:08:28.120 The logo was just the name auction Web, and then 0:08:28.160 --> 0:08:30.680 there was a gray scale bar that was right next 0:08:30.720 --> 0:08:32.960 to it, and it would get darker along its length. 0:08:33.000 --> 0:08:35.440 Until it was black at the very end. Some folks 0:08:35.480 --> 0:08:38.120 would call it the death bar because it was kind 0:08:38.120 --> 0:08:40.960 of grim and black and white now and eBay, the 0:08:41.200 --> 0:08:45.000 parents site that hosted auction Web had the exact same 0:08:45.080 --> 0:08:49.800 bar next to its name, not very inspired. By January nine, 0:08:51.080 --> 0:08:55.560 the site was hosting two million auctions a month. Throughout 0:08:55.679 --> 0:09:00.520 n the site had hosted two fifty thousand auctions total, 0:09:00.920 --> 0:09:05.480 so growth was truly explosive. One thing that fueled such 0:09:05.600 --> 0:09:11.319 crazy growth was Beanie Babies. And you may, Madrugis have 0:09:11.400 --> 0:09:14.640 forgotten about beanie babies, or or maybe you never were 0:09:14.679 --> 0:09:18.160 around to experience that particular fad. And I know there 0:09:18.280 --> 0:09:20.480 was a Beanie Babies two point oh that came out 0:09:20.559 --> 0:09:23.000 sometime around two thousand and eight, but come on, those 0:09:23.080 --> 0:09:27.319 never achieved the fever pitch of that original run. Beanie 0:09:27.320 --> 0:09:30.120 Babies are a line of plush toys. They're kind of 0:09:30.160 --> 0:09:33.280 like bean bags, and they're cute little animals, and they 0:09:33.320 --> 0:09:37.880 caught on like gang busters, and collectors rushed stores to 0:09:38.000 --> 0:09:40.400 grab them as soon as they would hit store shelves. 0:09:40.840 --> 0:09:43.800 A few Beanie Babies were produced in limited runs, which 0:09:43.880 --> 0:09:48.400 drove up their market value significantly. I remember even seeing 0:09:48.480 --> 0:09:53.679 roadside stands with beanie babies, which were probably counterfeits in retrospect, 0:09:54.120 --> 0:09:56.600 but those were being sold on the side of the road, 0:09:56.679 --> 0:10:00.680 and those were heavy days, my friend. Anyway, beanie babies 0:10:00.720 --> 0:10:04.080 were one of the most popular products moving across eBay 0:10:04.240 --> 0:10:08.560 in nineteen seven. According to the company's own timeline, the 0:10:08.640 --> 0:10:13.000 sales of beanie babies hit about half a billion dollars 0:10:13.400 --> 0:10:16.719 and they represented more than six percent of the company's 0:10:16.760 --> 0:10:20.800 total volume of sales going across its site, which is 0:10:20.840 --> 0:10:24.040 a whole lot of beanie babies. And I also meant 0:10:24.080 --> 0:10:27.440 that there were a lot of of of listing fees 0:10:27.480 --> 0:10:30.280 that were coming into eBay as people were bidding on 0:10:30.400 --> 0:10:35.120 and winning these things. In May nine seven, eBay made 0:10:35.200 --> 0:10:39.280 its one millionth sale, or to be fair, users made 0:10:39.280 --> 0:10:42.600 the one millionth sale. eBay profited off of it. Now, 0:10:42.720 --> 0:10:44.800 I know, you just heard me say just a short 0:10:44.800 --> 0:10:48.200 while ago that the company had hit two million auctions 0:10:48.320 --> 0:10:52.000 back in January nine, So how could they only hit 0:10:52.040 --> 0:10:55.960 their millionth sale in May seven. Well, keep in mind, 0:10:55.960 --> 0:10:59.800 not every auction results in an actual sale. So if 0:10:59.800 --> 0:11:01.960 we say that the company had two million auctions in 0:11:02.040 --> 0:11:07.240 January and the million item was sold in May, we 0:11:07.280 --> 0:11:10.439 see the success rate of auctions is less than fifty 0:11:11.120 --> 0:11:14.120 which is kind of interesting. Oh that millionth item, by 0:11:14.120 --> 0:11:16.439 the way, in case you were curious, was a big 0:11:16.440 --> 0:11:19.319 Bird jack in the box toy, as in big Bird 0:11:19.360 --> 0:11:22.840 from Sesame Street, and it was to it's cute. In 0:11:22.840 --> 0:11:28.400 September nine, auction Web officially took its final bow and 0:11:28.440 --> 0:11:34.040 transformed metamorphosis like into eBay, so auction Web was no more. 0:11:34.200 --> 0:11:36.959 eBay was now the name of the service and the company, 0:11:36.960 --> 0:11:40.480 which everyone had pretty much been using since it launched. 0:11:40.840 --> 0:11:43.960 But around that same time, the company received nearly seven 0:11:44.120 --> 0:11:48.360 million dollars in venture capital funding, and Skull decided that 0:11:48.400 --> 0:11:51.480 the logo needed a facelift two, as the death bar 0:11:51.679 --> 0:11:56.439 wasn't precisely appealing. For a very short while, eBay adopted 0:11:56.440 --> 0:11:59.720 a navy blue logo that had a stylized E and 0:12:00.280 --> 0:12:03.320 combined with each other. But this didn't last very long 0:12:03.400 --> 0:12:06.520 and in fact may have never shown up on an 0:12:06.600 --> 0:12:10.320 online site anywhere, and may never have appeared on a 0:12:10.400 --> 0:12:14.160 web page. My research didn't show any signs of it. 0:12:14.160 --> 0:12:17.400 It did show up on some stationary and letterhead, but 0:12:17.520 --> 0:12:20.920 that was about it. They contacted an ad agency called 0:12:21.000 --> 0:12:23.520 c K S group, and they hired them to come 0:12:23.559 --> 0:12:26.440 up with a new design for the logo. According to 0:12:26.440 --> 0:12:29.360 Bill Cleary, who worked at c k S, the team 0:12:29.400 --> 0:12:32.040 felt that eBay's new logo had to appeal to a 0:12:32.120 --> 0:12:35.840 broad base of people because folks from all different walks 0:12:35.880 --> 0:12:39.480 of life were actually making use of the site. Ultimately, 0:12:39.720 --> 0:12:42.040 the team came up with a new design in which 0:12:42.120 --> 0:12:45.600 eBay has a colorful logo with a red E, a 0:12:45.679 --> 0:12:49.000 blue be, a yellow A, and a green y. The 0:12:49.080 --> 0:12:52.960 letters slightly overlap one another, and the baseline shifted from 0:12:53.040 --> 0:12:56.440 letter to letters so they were slightly offset vertically. The 0:12:56.520 --> 0:12:59.839 team felt the new logo was friendly and accessible, and 0:13:00.040 --> 0:13:03.200 the logo rolled out in the fall of n along 0:13:03.200 --> 0:13:07.440 with a complete redesign of the page. Meanwhile, Jeff Skull 0:13:07.520 --> 0:13:10.319 and Pierre A. Midier were looking for someone to lead 0:13:10.440 --> 0:13:14.680 eBay moving forward with the goal of transforming the company 0:13:14.800 --> 0:13:18.599 into a publicly traded company. By now, we're talking n 0:13:20.000 --> 0:13:23.000 and era in which the sky was the limit for 0:13:23.080 --> 0:13:26.800 Internet companies. Things were just starting to really take off, 0:13:27.080 --> 0:13:30.480 and the dot com bubble was poised to expand dramatically 0:13:30.880 --> 0:13:34.400 before it would ultimately collapse. A few years later, eBay 0:13:34.600 --> 0:13:37.640 was on the verge of transitioning from a startup into 0:13:37.720 --> 0:13:40.800 a much larger entity, and Skull in a midi Are 0:13:40.920 --> 0:13:44.040 needed someone with experience to take the helm. The two 0:13:44.080 --> 0:13:48.160 reached out to Meg Whitman. Whitman says she got a 0:13:48.200 --> 0:13:51.480 call from a headhunter about working for eBay and being 0:13:51.520 --> 0:13:55.280 its new president and CEO, but she wasn't eager to 0:13:55.400 --> 0:13:58.320 take the company up on the offer because it would 0:13:58.400 --> 0:14:01.120 mean traveling across the country to take a new job. 0:14:01.320 --> 0:14:03.160 She was worried about the impact this would have on 0:14:03.200 --> 0:14:06.680 her husband and their kids, and when she visited the site, 0:14:06.960 --> 0:14:09.760 she said she saw the stuff about the biotech company 0:14:09.800 --> 0:14:12.920 that Pamela worked for and the Ebola virus, and she 0:14:13.000 --> 0:14:16.240 wondered what the heck was going on, So she must 0:14:16.280 --> 0:14:19.480 have seen the site before omdi Are shifted all those 0:14:19.480 --> 0:14:22.680 pages away. But she did agree to meet with Omdiar 0:14:22.920 --> 0:14:24.880 and he convinced her to sign on with the company 0:14:24.920 --> 0:14:27.600 as the new CEO after she spent about a day 0:14:27.640 --> 0:14:31.720 in the company's offices. When Whitman joined, eBay was a 0:14:31.840 --> 0:14:35.240 thirty person operation and it was pulling in about four 0:14:35.320 --> 0:14:40.760 million dollars in revenue. Whitman had extensive experience in business. 0:14:40.800 --> 0:14:43.440 She had worked as a brand manager for Procter and 0:14:43.440 --> 0:14:46.600 Gamble and rose to the role of senior vice president there. 0:14:46.960 --> 0:14:49.520 Then she worked for other companies like the Walt Disney 0:14:49.520 --> 0:14:54.560 Company and Hasbro. Whitman began work by reorganizing the company. 0:14:54.640 --> 0:14:58.800 She created business divisions focused on specific verticals and formed 0:14:58.840 --> 0:15:01.560 executive teams by pulling people from some of the very 0:15:01.600 --> 0:15:04.160 companies she used to work for to head up those 0:15:04.160 --> 0:15:08.680 new divisions. She also continued work on eBay's redesign, and 0:15:08.760 --> 0:15:12.320 she demanded the site create a walled off age restricted 0:15:12.360 --> 0:15:16.160 offshoot for sales of items that were not appropriate for families, 0:15:16.560 --> 0:15:21.240 things like pornography or firearms. Now eventually eBay would form 0:15:21.560 --> 0:15:24.720 policies that would ban such stuff from their sites. That 0:15:24.920 --> 0:15:29.080 you can't sell firearms that auction on eBay. You also 0:15:29.160 --> 0:15:32.880 can't sell things like drugs or alcohol, oh and body 0:15:32.960 --> 0:15:38.960 parts yikes. In May, the site launched a new feature 0:15:39.040 --> 0:15:43.320 called my eBay, which allowed users to customize their eBay experience, 0:15:43.680 --> 0:15:46.040 making it easier for them to find things they were 0:15:46.080 --> 0:15:49.240 most interested in and to keep up to speed with auctions. 0:15:49.640 --> 0:15:55.160 And in June, eBay acquired another company called Jump Incorporated. 0:15:55.800 --> 0:15:59.840 Jump Incorporated developed a trading service supported by ads, and 0:16:00.280 --> 0:16:03.800 that service was called up for sale before being the 0:16:03.920 --> 0:16:07.520 number four. It would be the first of several acquisitions 0:16:07.600 --> 0:16:10.880 led by Meg Whitman. Not all of them would turn 0:16:10.920 --> 0:16:15.520 out to necessarily be great moves for eBay. Spoiler alert, 0:16:15.720 --> 0:16:19.760 I guess, but Whitman was working hard to prepare eBay 0:16:19.800 --> 0:16:23.040 for that initial public offering, and when it happened, it 0:16:23.080 --> 0:16:25.440 would turn all those who had a significant share in 0:16:25.640 --> 0:16:29.480 eBay into billionaires. I'll tell you more about that in 0:16:29.600 --> 0:16:32.120 just a second, but first let's take another quick break 0:16:32.280 --> 0:16:44.400 to thank our sponsor. In late September, eBay held its 0:16:44.440 --> 0:16:48.600 initial public offering. The opening price for eBay was listed 0:16:48.640 --> 0:16:52.120 at eighteen dollars per share. The stock price behaved a 0:16:52.120 --> 0:16:55.520 bit like an eBay auction. It climbed higher and higher. 0:16:56.160 --> 0:16:59.440 It peaked at fifty three dollars fifty cents per share, 0:16:59.720 --> 0:17:02.160 but were closing a little lower at forty seven and 0:17:02.240 --> 0:17:05.640 three eights. That would be an increase of one hundred 0:17:05.840 --> 0:17:09.880 sixty three percent over its opening price. There were three 0:17:09.920 --> 0:17:13.959 point five million shares offered, which gave the company a 0:17:14.040 --> 0:17:19.240 market capitalization of one point oh five billion dollars. The 0:17:19.320 --> 0:17:24.239 IBO raised some sixty three million dollars in cash. It 0:17:24.320 --> 0:17:28.320 was the fifth most successful I p O ever, and 0:17:28.400 --> 0:17:33.240 this humble hobby turned a metier into a billionaire. Whitman 0:17:33.680 --> 0:17:38.080 jokingly issued a warning to eBay employees that she would 0:17:38.160 --> 0:17:40.679 fire them if they kept their eyes on the stock 0:17:40.720 --> 0:17:44.520 price day after day. They were understandably excited at their 0:17:44.560 --> 0:17:48.439 new found wealth, and people were frequently having the stock 0:17:48.480 --> 0:17:51.760 price up on their web pages and staring at them 0:17:51.760 --> 0:17:54.040 at the screen instead of actually doing their work. So 0:17:54.119 --> 0:17:58.560 Whitman said, hey, guys, if you wanna remain millionaires, turn 0:17:58.640 --> 0:18:04.240 off those screens. In December, the company founded the eBay Foundation, 0:18:04.480 --> 0:18:07.600 and organization that uses pre i p O stock to 0:18:07.760 --> 0:18:13.000 fund nonprofit organizations and entrepreneur ideas around the world. Pierre 0:18:13.040 --> 0:18:16.200 and Pamela have spent much of their time and money 0:18:16.280 --> 0:18:19.320 dedicated to charitable endeavors, and the company has sort of 0:18:19.359 --> 0:18:23.119 followed suit today. The eBay Foundation's mission statement is to 0:18:23.320 --> 0:18:28.480 quote unleash the power of entrepreneurship to build economically vibrant 0:18:28.560 --> 0:18:33.840 and sustainable communities. We develop strategic partnerships with nonprofit organizations 0:18:34.080 --> 0:18:38.480 using our financial resources, platform and people to foster networks 0:18:38.480 --> 0:18:42.800 of support for entrepreneurs and small businesses. Our programs focus 0:18:42.840 --> 0:18:47.679 on vulnerable populations and underserved communities. We also empower eBay 0:18:47.720 --> 0:18:50.840 employees to make a greater impact and communities around the 0:18:50.840 --> 0:18:54.320 globe by matching their donations and making cash donations when 0:18:54.320 --> 0:18:58.080 they volunteer. End quote. Now let's skip ahead a little bit. 0:18:58.600 --> 0:19:01.760 We're gonna skip ahead to these some are of there's 0:19:01.760 --> 0:19:03.680 a lot of things that were happening at this company, 0:19:03.720 --> 0:19:06.719 but we're already getting pretty bogged down in my nusha, 0:19:06.840 --> 0:19:08.760 so I want to hit some of the big, big 0:19:08.800 --> 0:19:12.640 stories of eBay. The company was growing rapidly. We're still 0:19:12.640 --> 0:19:16.000 in the dot com bubble phase. New employees were brought on, 0:19:16.200 --> 0:19:19.000 revenues were up. The stock price had continued to climb, 0:19:19.200 --> 0:19:21.840 hitting more than a hundred fifty dollars per share. At 0:19:21.840 --> 0:19:25.840 this point, the dot com bubble was getting pretty darn big, 0:19:25.960 --> 0:19:28.760 and there were only a few signs the dark times 0:19:28.760 --> 0:19:32.480 were ahead for the industry as a whole. But eBay 0:19:32.680 --> 0:19:35.879 suffered an early setback that got a lot of attention. 0:19:36.280 --> 0:19:40.480 The site started having some serious connection issues. The stability 0:19:40.520 --> 0:19:44.879 of the site was in question. In June nine, the 0:19:44.960 --> 0:19:50.240 site went down for twenty two hours. This was huge 0:19:50.280 --> 0:19:54.600 news at the time, buyers and sellers were angry and distraught. 0:19:55.160 --> 0:19:58.160 Imagine that you're sitting there ready to snipe an auction 0:19:58.240 --> 0:20:00.359 for a signed copy of Weird Old yank of Vic's 0:20:00.440 --> 0:20:04.040 first album, and then the site crashes and it doesn't 0:20:04.040 --> 0:20:07.800 come back for nearly a full day. So what was 0:20:07.840 --> 0:20:11.919 going on? According to eBay, the software powering the site 0:20:12.200 --> 0:20:16.520 was at fault, and that software came from two outside vendors, 0:20:16.840 --> 0:20:20.840 Sun Microsystems and Oracle. Now. I covered Oracle in some 0:20:20.960 --> 0:20:23.520 recent episodes. You can go back and listen to those 0:20:23.520 --> 0:20:27.280 and learn all about that company. It's also a fascinating story. 0:20:27.320 --> 0:20:29.719 But other people were suggesting that perhaps the site had 0:20:29.760 --> 0:20:33.480 stability issues due to scaling up to a larger platform, 0:20:33.560 --> 0:20:36.240 the issue being that more and more people were using 0:20:36.320 --> 0:20:40.280 eBay and the company just wasn't prepared to handle the 0:20:40.359 --> 0:20:43.720 increase in traffic. Meg Whitman and Pierre a medi Are 0:20:43.920 --> 0:20:48.080 issued a letter of apology to eBay users. They explained 0:20:48.080 --> 0:20:50.640 that the company was working hard on creating a backup 0:20:50.680 --> 0:20:53.600 system that could keep the site running in case of 0:20:53.600 --> 0:20:58.280 a failure, and that sadly, this backup system just wasn't 0:20:58.359 --> 0:21:02.119 quite ready before the crowd actually happened. So essentially they 0:21:02.160 --> 0:21:05.080 were saying, we anticipated that this could be a problem, 0:21:05.080 --> 0:21:07.080 and we were working on the solution. The problem was 0:21:07.119 --> 0:21:10.960 the solution wasn't ready before the problem happened. They also 0:21:11.040 --> 0:21:14.879 said that they had contacted not just their own experts, 0:21:14.920 --> 0:21:18.480 but people at these vendors like Sun Microsystems to work 0:21:18.600 --> 0:21:22.000 tirelessly to get the site back up and running, and 0:21:22.040 --> 0:21:25.120 they said they would institute a new policy moving forward. 0:21:25.600 --> 0:21:28.280 If the site were to crash for less than two hours, 0:21:28.800 --> 0:21:32.160 any auction that was scheduled to end during those two 0:21:32.160 --> 0:21:35.879 hours would automatically get a twenty four hour extension to 0:21:36.000 --> 0:21:39.199 allow for additional bids unless the seller wished to end 0:21:39.240 --> 0:21:42.680 the auction, and for any outage lasting more than two hours, 0:21:43.040 --> 0:21:46.600 eBay would refund the fee it charged for a successful auction, 0:21:46.880 --> 0:21:49.479 so in other words, there would be no listing price 0:21:49.640 --> 0:21:53.360 that would be charged to a seller if the if 0:21:53.359 --> 0:21:55.280 the site had been down for more than two hours, 0:21:55.640 --> 0:21:59.000 and according to estimates, that twenty two hour crash cost 0:21:59.040 --> 0:22:03.000 eBay about two million bucks in revenue, and while some 0:22:03.119 --> 0:22:06.320 users were motivated to leave the platform for other places 0:22:06.359 --> 0:22:10.320 like Amazon, many people chose to stay. The site had 0:22:10.359 --> 0:22:13.480 a few more allegies that same summer, including a nine 0:22:13.640 --> 0:22:18.320 hour outage that happened in August nine, and while this 0:22:18.440 --> 0:22:22.120 wasn't a pleasant experience, it did have a positive outcome, 0:22:22.240 --> 0:22:25.760 according to Jim Griffith, a k a. Uncle griff He 0:22:25.840 --> 0:22:29.200 said it caused eBay to realize that their work affected 0:22:29.280 --> 0:22:33.160 real people in a very tangible way. People were relying 0:22:33.280 --> 0:22:37.160 on eBay as a storefront, and when that storefront is down, 0:22:37.840 --> 0:22:40.960 they can't make their living. He said. This realization motivated 0:22:41.000 --> 0:22:43.840 eBay to step up and work on creating a reliable 0:22:43.920 --> 0:22:47.960 service that was more robust and resistant to outages. In 0:22:48.080 --> 0:22:51.919 July nine, not even a year after the I p O, 0:22:52.400 --> 0:22:58.160 eBay expanded internationally, launching sites in Germany, the UK, and Australia. 0:22:58.359 --> 0:23:01.359 Women demanded that each country of its own tailored version 0:23:01.440 --> 0:23:04.400 of eBay that would appeal to the people of those countries, 0:23:04.960 --> 0:23:08.760 and in January two thousand, eBay would purchase several buildings 0:23:08.800 --> 0:23:11.720 in the business park it occupied. This is when they 0:23:11.800 --> 0:23:15.440 created eBay Park, and as I said, earlier buildings took 0:23:15.480 --> 0:23:19.000 on the names of the various categories eBay offered, and 0:23:19.040 --> 0:23:22.320 in April two thousand, eBay introduced a new company called 0:23:22.359 --> 0:23:25.240 eBay Motors, At the time, it was a pretty wild 0:23:25.280 --> 0:23:27.920 idea to purchase a new or used car from an 0:23:27.920 --> 0:23:31.320 online storefront. But it worked, and it works so well 0:23:31.359 --> 0:23:34.639 that others began to follow suit, and suddenly eBay Motors 0:23:34.800 --> 0:23:38.879 had some pretty stiff competition. Like the normal auction site, 0:23:38.960 --> 0:23:43.240 eBay Motors would only charge users if a transaction completed 0:23:43.440 --> 0:23:46.520 across the site. At that point, eBay would charge the 0:23:46.600 --> 0:23:49.480 seller a listing fee, which was capped at a maximum 0:23:49.520 --> 0:23:54.360 of one dollars. Since the acquisition of Up for Sale 0:23:54.960 --> 0:23:59.800 back in, eBay had purchased several other companies, and most 0:23:59.800 --> 0:24:03.359 of the were either auction services or payment systems. In 0:24:03.400 --> 0:24:07.240 two thousand one, eBay bought a French company called I Bizarre, 0:24:07.640 --> 0:24:10.639 which gave eBay another foothold in Europe. It was another 0:24:10.800 --> 0:24:13.760 similar service that was going on in France, and all 0:24:13.760 --> 0:24:16.399 of this led up to the largest acquisition the company 0:24:16.440 --> 0:24:20.600 would make in those early years, which was PayPal. That 0:24:20.720 --> 0:24:23.400 acquisition happened in two thousand two, and it was valued 0:24:23.480 --> 0:24:27.600 at one point five billion dollars, making it by far 0:24:28.160 --> 0:24:32.320