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Speaker 1: Get in touch with technology with tech Stuff from how

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Speaker 1: Stuff Works dot com. Hey there, and welcome to tech Stuff.

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Speaker 1: I'm your host, Jonathan Strickland. I'm an executive producer at

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Speaker 1: how Stuff Works and I love all things tech and

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Speaker 1: today's episode comes to us the courtesy of a request

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Speaker 1: from a listener. Neil asked me to cover this, and

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Speaker 1: to start off, I want to just talk about a

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Speaker 1: certain myth. There's a legend in Silicon Valley that eBay,

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Speaker 1: the auction website that was one of the notable survivors

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Speaker 1: after the dot com crash, was founded because of Pez dispensers.

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Speaker 1: The legend is a pretty charming one, and it tells

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Speaker 1: the story about Pierre A Midier. He's the son of

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Speaker 1: Iranians who had moved to France to pursue higher education,

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Speaker 1: and Pierre's fiance, Pamela, was a fan of Pez dispensers,

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Speaker 1: those little plastic candy dispensing toys that frequently take the

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Speaker 1: form of licensed characters like Mickey Mouse or Batman or

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Speaker 1: hundreds of others. Pam was having trouble finding fellow enthusiasts

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Speaker 1: in the San Francisco area. She had previously lived in

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Speaker 1: the Boston area, and she knew a lot of other

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Speaker 1: collectors over on the East coast, and so Pierre designed

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Speaker 1: a website meant to allow people to post items they

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Speaker 1: wished to sell and auction them off to the highest bidder.

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Speaker 1: Which is a cute story, but it's not true. It

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Speaker 1: was actually all a pr thing that was made up

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Speaker 1: to kind of give eBay this sort of charming history.

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Speaker 1: So today we are going to explore the full story

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Speaker 1: behind eBay, how it came to be, and how it

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Speaker 1: survived when so many other websites failed. Our story does

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Speaker 1: begin with Pierre omidi Are, the man who would build

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Speaker 1: the first incarnation of eBay. He was born in Paris, France,

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Speaker 1: in nineteen sixty seven, and when he was six years old,

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Speaker 1: his family immigrated to the United States. They moved to

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Speaker 1: the Baltimore area, and Pierre's father took up a urology

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Speaker 1: residency at Johns Hopkins University. In school, Pierre was known

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Speaker 1: to kind of sneak off during gym class in order

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Speaker 1: to use the teacher's TRS e D home computer. This

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Speaker 1: was an old Tandy radio shack computer, thus the TRS name,

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Speaker 1: though it had a rather unfortunate nickname, not just at

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Speaker 1: Pierre's school, but worldwide it was sometimes kind of affectionately

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Speaker 1: referred to as the Trash eight. Pierre told himself how

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Speaker 1: to program in Basic as the basic programming language. He

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Speaker 1: was fascinated with computers and with programming in general in

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Speaker 1: middle school. He lived for a short while in Hawaii

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Speaker 1: and then returned back to the East Coast. When he

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Speaker 1: returned to Washington, d c. For high school, he began

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Speaker 1: working on Apple two computers and he learned to program

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Speaker 1: in Pascal, which was a big step up from Basic.

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Speaker 1: He even lay ended a gig at his high school

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Speaker 1: computerizing the card catalog for the library. And he graduated

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Speaker 1: high school and enrolled in Tufts University, which is outside

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Speaker 1: of Boston, and he majored in computer science and that's

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Speaker 1: where he met his future wife, Pamela, who was studying biology.

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Speaker 1: Pierre was a devotee of Apple, and he eschewed the

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Speaker 1: IBM compatible PCs that were beginning to dominate computer labs,

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Speaker 1: so he didn't really have any desire to go into

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Speaker 1: the computer lab, even though his major was computer science. Instead,

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Speaker 1: he preferred to work on a Macintosh computer and he

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Speaker 1: created a programming utility as an exercise in his junior year,

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Speaker 1: he began looking for a potential job as a Mac programmer,

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Speaker 1: and he applied to a company called Innovative Data Design,

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Speaker 1: which offered him an internship based off his application and

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Speaker 1: the Mac utility he had created. That led to a

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Speaker 1: full time position, and Pierre took a semester off to

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Speaker 1: get more experience in the programing world. So he leaves

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Speaker 1: school for a short while and works for a semester

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Speaker 1: in the private sector. He returned to Tufts for another semester,

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Speaker 1: but then transferred to the University of California, Berkeley to

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Speaker 1: finish out his undergraduate degree, and he moved out West Pamela.

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Speaker 1: His girlfriend, slash fiance, continued her studies at the University

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Speaker 1: of California, Santa Cruz. She had already earned a bachelor's

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Speaker 1: degree in biology and now was studying plant molecular genetics.

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Speaker 1: Smart Lady Pierre then went to work for a company

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Speaker 1: called Clariss. Interesting little side note, Claris was a subsidiary

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Speaker 1: of Apple, so I covered this a little bit in

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Speaker 1: the Apple story about how the company was trying to

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Speaker 1: deal with software for its Macintosh line. It had formed

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Speaker 1: Claris in nineteen seven when Apple needed to devote resources

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Speaker 1: to creating updates to aging software packages like Mac draw

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Speaker 1: and Mac Project. Pierre was a Mac programmer working for

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Speaker 1: Apple sort of by way of a subsidiary, and there

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Speaker 1: was a sweet deal that was on the horizon. Claris

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Speaker 1: was poised to spin off from Apple and hold its

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Speaker 1: own initial public offering or i p O. Employees who

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Speaker 1: had a stake in the company would end up making

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Speaker 1: a lot of money if the i p O went well.

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Speaker 1: So things were looking up, and this is generally how

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Speaker 1: initial public offerings go. You normally have employees who have

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Speaker 1: some sort of ownership in the company, and when it

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Speaker 1: goes public, they end up getting a reward of stock

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Speaker 1: in the company. And if the i p O goes

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Speaker 1: really well, then the stock's value increases, and thus you

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Speaker 1: can end up becoming wealthy overnight. But then in Apple

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Speaker 1: decided it was not going to spin off Claris after all,

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Speaker 1: and the company would remain a subsidiary under Apple. That

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Speaker 1: decision prompted the company president, that is, Clariss's company president,

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Speaker 1: to leave Claris, and that initiated something of an exodus

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Speaker 1: of employees throughout ninety ninety one, including Pierre. He decided

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Speaker 1: he was going to leave the company and try something new.

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Speaker 1: So the year was nine and Pierre was partnered with

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Speaker 1: some friends to launch their own business. They decided they

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Speaker 1: were going to try and create their own company, and

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Speaker 1: this one was called Ink Development Corporation. This company specialized

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Speaker 1: in programming software for pen based computers, that is, light

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Speaker 1: pens as an input device, and specifically they were developing

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Speaker 1: for the PenPoint operating system from a company called Go Corporation. Now,

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Speaker 1: at the time, Pierre was banking on the pen input

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Speaker 1: system to become the next big thing in computing. For

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Speaker 1: one thing, using a pen is at least seen as

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Speaker 1: being far more intuitive than using a keyboard, same sort

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Speaker 1: of thing as touch interfaces with screen based designs like

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Speaker 1: like tablets and smartphones. That was the reasoning anyway, But

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Speaker 1: it turned out the team was way ahead of their

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Speaker 1: time on this bet and it just never really took off.

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Speaker 1: But fortunately they had not put all of their eggs

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Speaker 1: in the pen computer basket. They had also started to

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Speaker 1: develop software for the burgeoning online market in ninety three,

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Speaker 1: when it became pretty clear the pen based computing thing

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Speaker 1: wasn't going anywhere. The Internet was starting to get a

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Speaker 1: lot of buzz and the team rebranded their company and

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Speaker 1: called it E Shop lower case E big S. One

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Speaker 1: thing that was interesting about the shop was that it

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Speaker 1: was not directly connected to the Internet. You would not

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Speaker 1: log onto the Internet and then use something like Google

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Speaker 1: or some other web search program to go over to

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Speaker 1: the shop and then peruse the virtual aisles. It was

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Speaker 1: a network, but one that you would have to access

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Speaker 1: directly through a Windows application that dialed out through CompuServe

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Speaker 1: and Sprint network links. So in other words, instead of

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Speaker 1: going to the Internet, you were essentially dialing directly into

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Speaker 1: this service. That made it closer to something like a

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Speaker 1: bulletin board system from back in the day. Multiple users

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Speaker 1: could be on at a single time, but only through

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Speaker 1: that direct connection, so it was not yet an Internet shop.

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Speaker 1: Pierre figured that the Internet was really the future. He figured,

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Speaker 1: this is really where things are gonna go, and he

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Speaker 1: was a little frustrated with how reluctant his partners were

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Speaker 1: to bring a shop fully online, and so he left

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Speaker 1: the company in nineteen but he still held on to

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Speaker 1: a stake in the company. He still had some ownership,

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Speaker 1: which ended up being a really good decision for him

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Speaker 1: because in nineteen ninety six, which was a year after

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Speaker 1: eBay would launch. I'm just skipping ahead for a second here,

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Speaker 1: Microsoft would acquire e Shop, and that acquisition was done

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Speaker 1: in part through stocks, meaning Microsoft would grant stocks to

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Speaker 1: people who shared ownership in the shop and they would

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Speaker 1: get a certain number of Microsoft shares. That turned Pierre

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Speaker 1: into a millionaire overnight. He had the free him to

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Speaker 1: work on whatever he liked at that point, and of

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Speaker 1: course by then eBay was already a thing. I thought

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Speaker 1: it wasn't called that yet anyway. The other thing he

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Speaker 1: ended up working on after he left the shop was

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Speaker 1: a company called General Magic that was founded by Bill Atkinson,

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Speaker 1: Andy Hurtzfeld, and Mark Poor at Now, Hurtzfeld and Atkinson

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Speaker 1: were two of the members of the original Macintosh team.

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Speaker 1: They actually designed the original Macintosh, and Pierre was gonna

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Speaker 1: get to go work for the men who designed the

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Speaker 1: computer he had grown to love so much and the

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Speaker 1: one that he had cut his teeth on when he

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Speaker 1: was really getting serious about programming, so he was pretty

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Speaker 1: excited about it. General Magic was developing small handheld computing devices.

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Speaker 1: There were sort of a predecessor to personal digital assistants

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Speaker 1: or p d a s. If you remember those and

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Speaker 1: PDAs in turn were sort of the predecessors for smartphones.

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Speaker 1: Pierre's job was to kind of act as a liaison

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Speaker 1: between General Magic and third party programmers, so he was

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Speaker 1: kind of helping third party programmers who wanted to build

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Speaker 1: software for this platform. The platform was called Magic Cap

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Speaker 1: and the company had created this in an effort to

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Speaker 1: get more software developed for the technology in general. So

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Speaker 1: in other words, you had Pierre standing there as kind

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Speaker 1: of an aid, someone who could give expertise to people

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Speaker 1: who wanted to develop software for this brand new platform,

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Speaker 1: and uh, he was deriving a lot of pleasure out

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Speaker 1: of that. In his spare time, he was brainstorming ways

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Speaker 1: to leverage the Internet. And by the mid nineties, everyone

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Speaker 1: was pretty sure the Internet was going to change everything,

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Speaker 1: but no one had really cracked how that was going

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Speaker 1: to happen yet. It was still an early adoption period

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Speaker 1: for the Internet and e commerce hadn't quite taken off yet.

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Speaker 1: And this is when the story of Pamela and the

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Speaker 1: Pez dispensers would come into play. When it was when

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Speaker 1: it was presented as eBay's actual past. But while that

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Speaker 1: could have potentially played a part in Pierre's brainstorming if

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Speaker 1: it had been true, the actual truth of the matter

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Speaker 1: was way more complicated and messy, and I'll explain how

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Speaker 1: in just a second, but first let's take a quick

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Speaker 1: break to thank our sponsor. So Pierre O Mindiar, who

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Speaker 1: had recently left the shop and now was working for

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Speaker 1: General Magic, would occasionally take on consulting or freelance work.

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Speaker 1: So he created a sole proprietorship business and he called

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Speaker 1: it Echo Bay Technology Group because he thought the name

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Speaker 1: sounded cool. He didn't actually live anywhere near any place

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Speaker 1: called echo Bay. He tried to register the domain echo

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Speaker 1: bay dot com but discovered that it was already taken

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Speaker 1: so he couldn't have it. So he decided to register

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Speaker 1: eBay dot com instead, as that was readily available. And

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Speaker 1: this was an early nine there was no market place

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Speaker 1: on the site just yet. There was no eBay auction site,

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Speaker 1: so the name actually came before the business. At the time,

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Speaker 1: eBay dot com was sort of a catch all site

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Speaker 1: containing a midier's interests. He had information about his consulting

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Speaker 1: gigs on there, so you could hire him based off

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Speaker 1: that site, but he also had a section about the

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Speaker 1: Ebola virus. It was an information page about Ebola that

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Speaker 1: had links to news items. The website contained pages dedicated

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Speaker 1: to a biotech company that employed his fiancee, Pamela, and

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Speaker 1: he also had a page dedicated to the Alumni Association

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Speaker 1: of Tufts University because Pamela was president of that association. So,

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Speaker 1: in other words, eBay dot com was sort of a

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Speaker 1: hodgepodge of web pages, and really only Pierre and his

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Speaker 1: fiance were the common connectors among all the different pages.

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Speaker 1: It was actually really reminiscent of a lot of early websites.

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Speaker 1: If you were online during the early days of the web,

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Speaker 1: you would frequently encounter early websites created by people that

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Speaker 1: had a web page devoted to each of their interests,

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Speaker 1: and there'd be no real common thread between the interests

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Speaker 1: except for the fact that one person had all of them.

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Speaker 1: That happened a lot in the early days, and eBay

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Speaker 1: dot Com started out that way. Pierre had also been

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Speaker 1: thinking a lot about free markets because a few years

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Speaker 1: earlier he had decided to invest in the company three

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Speaker 1: d O that was a video game console company. I've

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Speaker 1: talked about three d O in the past. It was

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Speaker 1: one of those consoles that launched. It made a big impact,

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Speaker 1: and it was incredibly expensive, and it didn't stick around

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Speaker 1: for very long, but it still was pretty interesting and

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Speaker 1: Pierre was really kind of fascinated by it, so he

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Speaker 1: ended up investing in it back in a mediator put

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Speaker 1: in an order to buy stock with his brokerage firm.

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Speaker 1: The opening price went three DEO was holding its initial

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Speaker 1: public offering was supposed to be fifteen dollars per share,

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Speaker 1: but by the time omitt Year's order was processed, the

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Speaker 1: stock price had already gone up by fift so he

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Speaker 1: was buying it at a more expensive price than he

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Speaker 1: had originally intended. Now he was still able to sell

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Speaker 1: his stock off at a profit anyway. Later on, but

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Speaker 1: it got into thinking how was this fair? Because privileged

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Speaker 1: buyers were able to get hold of shares at the

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Speaker 1: fifteen dollar price point well before they would become available

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Speaker 1: to the general public. You had organizations that could buy

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Speaker 1: stock before the I p O officially launched, and he

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Speaker 1: felt like this was really unfair. When the public finally

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Speaker 1: gets a chance to buy stock, the price would have

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Speaker 1: already grown, which means they would see smaller profits than

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Speaker 1: the big wigs who were able to get in early

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Speaker 1: because they had really good connections. So Pierre started to

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Speaker 1: think about auctions and how they operate. He had not

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Speaker 1: real the attended auctions, but he liked the concept behind them,

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Speaker 1: because at an auction, the potential buyers decide what they

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Speaker 1: are willing to spend on any given item or service.

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Speaker 1: If someone else wants that item or service more, they

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Speaker 1: will pay more, assuming they have the funds to do so.

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Speaker 1: So if a seller sets an opening bid price that's

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Speaker 1: at too high a level, no one's going to bid.

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Speaker 1: So it's a free market approach that felt fair to Pierre.

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Speaker 1: You could place your bid, and if you got outbid,

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Speaker 1: you could decide if it was worth increasing your bid

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Speaker 1: again to stay in the auctions. No one would be

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Speaker 1: able to beat out anyone else just because of their connections. Really,

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Speaker 1: if someone has deeper pockets and a real desire to

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Speaker 1: own something, they could outbid everybody else, But you know

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Speaker 1: you and usually way how much is the thing worth

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Speaker 1: versus how much am I willing to pay for it?

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Speaker 1: He got to work coding in an effort to build

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Speaker 1: out a website that would allow people to post items

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Speaker 1: for sale and support an auction environment, and he worked

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Speaker 1: all over the labor day, weekend and on Labor Day itself.

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Speaker 1: In he launched it under his eBay dot Com site,

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Speaker 1: but it was not called eBay dot com itself. It

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Speaker 1: was called auction Web, so it was one site under

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Speaker 1: eBay dot com. I believe it was eBay dot com

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Speaker 1: slash a w if you wanted to go there directly

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00:16:20,280 --> 00:16:23,520
Speaker 1: upon its launch. It was a bare bones service. It

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Speaker 1: was mostly blue text against a gray background. There are

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00:16:27,360 --> 00:16:29,840
Speaker 1: only three things you could do on the site. You

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00:16:29,880 --> 00:16:32,920
Speaker 1: could list a new item for sale, you could view

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00:16:33,000 --> 00:16:35,480
Speaker 1: the items that were available, and you could place a

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Speaker 1: bid on an item. A media are supported the service

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00:16:38,640 --> 00:16:40,840
Speaker 1: as a hobby. He had no real plans to make

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Speaker 1: it a business. He promoted the site on various news groups,

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Speaker 1: but many of them required a moderator to review a

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Speaker 1: post before listing a post, and everyone was on vacation

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Speaker 1: because it was the long weekend. By the end of

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Speaker 1: Labor Day weekend, auction Web had received precisely zero outside visitors.

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Speaker 1: But again, this was a hobby, so a media wasn't

286
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Speaker 1: really discouraged. He was just continuing on with his day.

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Speaker 1: Word did gradually get out, In fact, it didn't get

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00:17:07,640 --> 00:17:09,920
Speaker 1: take very long at all. By the middle of September

289
00:17:09,960 --> 00:17:13,119
Speaker 1: people were talking about it, and people began to list

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Speaker 1: items for auction on the site. According to the book

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Speaker 1: The Perfect Store, a medior visited a newsgroup at misq

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Speaker 1: as m I s C Dot for Sale dot non

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Speaker 1: computer and gave a complete rundown on all the non

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Speaker 1: computer items that were currently up for auction, along with

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00:17:31,720 --> 00:17:35,199
Speaker 1: their current bids over at auction Web, and here is

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00:17:35,240 --> 00:17:37,920
Speaker 1: a list of the things that you could have been

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00:17:37,960 --> 00:17:43,920
Speaker 1: on during that week. Superman Metal lunchbox nineteen sixty seven

298
00:17:44,160 --> 00:17:48,640
Speaker 1: used good condition. The current bid was at twenty two dollars.

299
00:17:48,720 --> 00:17:53,280
Speaker 1: Autographed Marky Mark underwear. Current bid was at four hundred dollars.

300
00:17:53,840 --> 00:17:58,240
Speaker 1: Autographed Elizabeth Taylor photo. Current bid was at two hundred dollars.

301
00:17:58,760 --> 00:18:02,800
Speaker 1: Autographed Michael Jack and poster. Current bid at four hundred dollars.

302
00:18:03,480 --> 00:18:08,000
Speaker 1: A toy power boat late fifties early sixties, current bid

303
00:18:08,240 --> 00:18:12,520
Speaker 1: sixty dollars. A Hubily five twenty cast iron hook and

304
00:18:12,640 --> 00:18:19,680
Speaker 1: ladder truck, current bid three hundred dollars. Collectors multicolor reflection hologram,

305
00:18:20,080 --> 00:18:25,480
Speaker 1: current bid five thousand dollars. A check vase, current bid

306
00:18:26,000 --> 00:18:30,520
Speaker 1: five dollars. And cobalt clear cut glass rose bowl current

307
00:18:30,560 --> 00:18:35,719
Speaker 1: bid twenty five dollars. That was the sum total of

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00:18:35,840 --> 00:18:40,359
Speaker 1: all the non computer elements, all the non computer items

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Speaker 1: that were available on eBay dot com at that point

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Speaker 1: eBay dot com slash a W that is, but none

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Speaker 1: of those items would be the first one actually purchased

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Speaker 1: off of auction web. According to the company's own history,

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Speaker 1: the very first item ever bought at auction at eBay

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00:18:59,240 --> 00:19:06,320
Speaker 1: dot com slash a W was drumroll please, a broken

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00:19:06,400 --> 00:19:11,440
Speaker 1: laser pointer, a laser pointer that was, as advertised broken.

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Speaker 1: What's more, we know who bought it. The name of

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Speaker 1: the person who purchased this broken laser pointer was Mark Fraser,

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Speaker 1: and I've seen some articles that suggested he was a

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00:19:21,600 --> 00:19:24,840
Speaker 1: collector of broken laser pointers. In fact, according to at

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00:19:24,880 --> 00:19:28,840
Speaker 1: least one story, Pierre omidy Are actually called up Mark

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00:19:28,880 --> 00:19:32,679
Speaker 1: Frasier personally and said, hey, you won this aunction, but

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00:19:32,760 --> 00:19:35,840
Speaker 1: did you know that this is for a broken laser pointer,

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Speaker 1: And supposedly Fraser responded, I collect them. But that's not

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Speaker 1: what Mr Fraser has said in interviews following this event.

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00:19:45,040 --> 00:19:47,760
Speaker 1: According to a video Mark Fraser appeared on as part

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Speaker 1: of eBay's twentieth anniversary celebration, the story goes like this,

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00:19:52,480 --> 00:19:55,080
Speaker 1: Frasier was traveling as part of this job and watching

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Speaker 1: a lot of presentations, and at some of these presentations,

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00:19:58,400 --> 00:20:01,399
Speaker 1: the people were using laser poinners, and Fraser thought they

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Speaker 1: were pretty neat, so he wanted one, but at the time,

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Speaker 1: they cost more than a hundred dollars and he really

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00:20:07,040 --> 00:20:09,280
Speaker 1: didn't have that kind of money to spend on something

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00:20:09,359 --> 00:20:12,560
Speaker 1: as frivolous as a laser pointer. So, being of an

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00:20:12,560 --> 00:20:16,080
Speaker 1: engineering mindset, he decided he would make his own. He

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00:20:16,160 --> 00:20:19,240
Speaker 1: got hold of a laser diode and he designed a

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00:20:19,280 --> 00:20:23,080
Speaker 1: circuit and built his first prototype, but there was a problem.

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00:20:23,119 --> 00:20:25,720
Speaker 1: The light wasn't focused in a tight beam like a

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00:20:25,800 --> 00:20:29,280
Speaker 1: laser and that's when he heard about auction web. He

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00:20:29,359 --> 00:20:31,760
Speaker 1: popped on there and he saw that someone was selling

340
00:20:31,880 --> 00:20:34,440
Speaker 1: a broken laser pointer, and he figured he could get

341
00:20:34,480 --> 00:20:37,080
Speaker 1: the broken pointer and use it to complete his own

342
00:20:37,160 --> 00:20:39,840
Speaker 1: d i Y project, and so he made a bid

343
00:20:40,119 --> 00:20:43,399
Speaker 1: and he won the auction for fourteen dollars and eighty

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Speaker 1: three cents, So it's not quite as ridiculous a story

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00:20:47,359 --> 00:20:50,560
Speaker 1: as some outlets made it out to be. One week

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00:20:50,600 --> 00:20:53,480
Speaker 1: after a Metier had shared that list of non computer

347
00:20:53,560 --> 00:20:56,600
Speaker 1: items that were available on auction web, he had an update,

348
00:20:56,920 --> 00:21:01,080
Speaker 1: and that included a warehouse in Idaho had an opening

349
00:21:01,160 --> 00:21:05,520
Speaker 1: bid set at three D twenty five thousand dollars. In

350
00:21:05,560 --> 00:21:09,080
Speaker 1: addition to crazy things, auction web was picking up traffic.

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Speaker 1: Word was spreading throughout the end of nine and by

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00:21:12,560 --> 00:21:15,560
Speaker 1: the close of the year, just a few months after launch,

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00:21:15,760 --> 00:21:18,840
Speaker 1: the site was receiving thousands of visitors and items had

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00:21:18,880 --> 00:21:23,320
Speaker 1: received tens of thousands of bids. This ended up being

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00:21:23,320 --> 00:21:26,960
Speaker 1: a problem. However, a Midier was still operating auction web

356
00:21:27,040 --> 00:21:29,840
Speaker 1: as a hobby. He was happy to have it hosted

357
00:21:29,920 --> 00:21:32,760
Speaker 1: under his eBay dot com site. With his other interests.

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Speaker 1: He was paying about thirty dollars a month in hosting

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00:21:35,600 --> 00:21:39,320
Speaker 1: fees for all the sites collectively. But auction web was

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00:21:39,359 --> 00:21:43,160
Speaker 1: starting to get serious traffic and a Medier's hosting service,

361
00:21:43,240 --> 00:21:47,800
Speaker 1: a company called Best, was complaining that this increased traffic

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00:21:47,920 --> 00:21:50,439
Speaker 1: was slowing down their network, so they told a Medier

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00:21:50,920 --> 00:21:53,840
Speaker 1: they were going to transition him to a commercial account,

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00:21:54,040 --> 00:21:56,639
Speaker 1: which would cost two d fifty dollars a month, not

365
00:21:56,880 --> 00:22:00,600
Speaker 1: thirty dollars a month. A Medior tried to contest the decision.

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Speaker 1: He said, auction web isn't a business, and at that

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Speaker 1: time it really wasn't It was a marketplace, but it was.

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Speaker 1: There was no way to make money from it. There

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00:22:10,320 --> 00:22:13,119
Speaker 1: was no cut of sales going on. But Best was

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00:22:13,160 --> 00:22:16,000
Speaker 1: not going to play ball, and a Mediora had a

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00:22:16,000 --> 00:22:18,760
Speaker 1: tough decision to make. He was gonna have to either

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00:22:19,000 --> 00:22:22,400
Speaker 1: walk away from this community that was starting to grow,

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Speaker 1: knowing that he couldn't really afford to pay two fifty

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00:22:25,840 --> 00:22:28,800
Speaker 1: dollars a month just to support a hobby. He had

375
00:22:28,840 --> 00:22:32,600
Speaker 1: not yet come into all that money from the acquisition

376
00:22:32,760 --> 00:22:36,919
Speaker 1: of the shop. That hadn't happened yet, So he was

377
00:22:36,960 --> 00:22:38,639
Speaker 1: either gonna have to walk away or he was going

378
00:22:38,680 --> 00:22:41,360
Speaker 1: to have to charge users for auction Web. But how

379
00:22:41,400 --> 00:22:44,040
Speaker 1: would he do it? Well, I'll explain in a second,

380
00:22:44,040 --> 00:22:47,520
Speaker 1: but first let's take another quick break to thank our sponsor.

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00:22:54,840 --> 00:22:58,600
Speaker 1: A medior didn't want to discourage people from using auction

382
00:22:58,640 --> 00:23:02,000
Speaker 1: Web and he wasn't crazy about the idea of charging

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00:23:02,040 --> 00:23:04,879
Speaker 1: people a fee to use it. So his solution was

384
00:23:04,920 --> 00:23:07,399
Speaker 1: to create a system in which people could view and

385
00:23:07,560 --> 00:23:11,320
Speaker 1: list items online for free. There was absolutely no charge

386
00:23:11,400 --> 00:23:14,080
Speaker 1: to shop around or put an item up for auction.

387
00:23:14,520 --> 00:23:17,479
Speaker 1: The fee would only come in after an auction ended

388
00:23:17,560 --> 00:23:20,680
Speaker 1: with a successful buyer. At that stage, auction web would

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00:23:20,720 --> 00:23:23,639
Speaker 1: take a percentage of the final bid. For bids that

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00:23:23,680 --> 00:23:26,480
Speaker 1: were less than twenty five dollars, auction web would take

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00:23:26,480 --> 00:23:29,879
Speaker 1: a cut of five percent. For auctions that ended above

392
00:23:30,000 --> 00:23:33,080
Speaker 1: twenty five dollars, the cut would be two point five percent,

393
00:23:33,160 --> 00:23:35,160
Speaker 1: and a medior kind of came up with this on

394
00:23:35,200 --> 00:23:40,520
Speaker 1: his own. Sellers began to send in money after successful auctions.

395
00:23:40,560 --> 00:23:43,879
Speaker 1: Sometimes it came in the form of a check. Sometimes

396
00:23:43,880 --> 00:23:48,200
Speaker 1: a Medior would literally receive cash or change in envelopes.

397
00:23:48,960 --> 00:23:52,480
Speaker 1: It wasn't terribly elegant, but it was working. In fact,

398
00:23:52,480 --> 00:23:54,920
Speaker 1: it was working so well that he was making more

399
00:23:55,000 --> 00:23:58,159
Speaker 1: than the two fifty dollars at cost in hosting fees,

400
00:23:58,480 --> 00:24:03,240
Speaker 1: so auction web was officially a profitable business. By February nine,

401
00:24:04,520 --> 00:24:07,280
Speaker 1: the site was doing pretty well. A midier was smart

402
00:24:07,400 --> 00:24:10,680
Speaker 1: enough to realize he didn't have the experience or business

403
00:24:10,800 --> 00:24:15,200
Speaker 1: education to run auction Web successfully on his own, so

404
00:24:15,320 --> 00:24:18,400
Speaker 1: he was spending nearly all his time either making sure

405
00:24:18,440 --> 00:24:22,160
Speaker 1: the site wasn't going to crash or building out new features.

406
00:24:22,200 --> 00:24:24,199
Speaker 1: So he looked around for someone who could join the

407
00:24:24,240 --> 00:24:27,120
Speaker 1: company and help him out by taking on a leadership role.

408
00:24:27,320 --> 00:24:29,840
Speaker 1: He reached out to a friend of a friend named

409
00:24:29,960 --> 00:24:34,159
Speaker 1: Jeff Skull. Skull had attended the University of Toronto and

410
00:24:34,200 --> 00:24:36,760
Speaker 1: earned a degree in engineering before he went on to

411
00:24:36,880 --> 00:24:40,720
Speaker 1: grad school at Stanford and earned an NBA. In between

412
00:24:40,840 --> 00:24:45,120
Speaker 1: undergrad and graduate school, he launched two companies successfully and

413
00:24:45,200 --> 00:24:48,080
Speaker 1: so he was doing pretty well. A midier had reached

414
00:24:48,080 --> 00:24:51,439
Speaker 1: out to Skull earlier in n to ask him to

415
00:24:51,480 --> 00:24:54,720
Speaker 1: work on auction Web, and at that time Skull turned

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00:24:54,760 --> 00:24:57,439
Speaker 1: down the offer. He didn't think people were ready to

417
00:24:57,520 --> 00:25:01,040
Speaker 1: use the Internet for commerce. He then went on to

418
00:25:01,119 --> 00:25:04,119
Speaker 1: work for a newspaper chain, but when he did that,

419
00:25:04,240 --> 00:25:08,119
Speaker 1: he saw that the newspaper business was terrified of the

420
00:25:08,160 --> 00:25:12,000
Speaker 1: Internet and its potential impact on the classified business. A

421
00:25:12,080 --> 00:25:15,199
Speaker 1: website could post the same sort of stuff as a

422
00:25:15,320 --> 00:25:20,840
Speaker 1: classified ad without the restriction for space, and with dynamic pricing.

423
00:25:21,320 --> 00:25:25,560
Speaker 1: Skull rethought his decision and in February nine he began

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00:25:25,600 --> 00:25:29,159
Speaker 1: to do some consulting work for auction Web. A media

425
00:25:29,160 --> 00:25:32,320
Speaker 1: are meanwhile, tried to instill in his users a sense

426
00:25:32,440 --> 00:25:36,160
Speaker 1: of community, and in fact that community began to coalesce.

427
00:25:36,760 --> 00:25:39,080
Speaker 1: Some have even gone so far as to call eBay

428
00:25:39,160 --> 00:25:42,879
Speaker 1: one of the first social networking platforms. A media or

429
00:25:43,000 --> 00:25:45,000
Speaker 1: was still running the show all by himself at this

430
00:25:45,080 --> 00:25:49,040
Speaker 1: point with some consulting work from Skull, and when problems

431
00:25:49,080 --> 00:25:51,560
Speaker 1: popped up, he was the only point of contact. His

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00:25:51,680 --> 00:25:55,040
Speaker 1: email address was on the website. He had to deal

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00:25:55,119 --> 00:25:58,320
Speaker 1: with the site issues as well as disputes between buyers

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00:25:58,320 --> 00:26:01,200
Speaker 1: and sellers, and so, in an effort to make things

435
00:26:01,240 --> 00:26:04,240
Speaker 1: run a little more smoothly and to help remove himself

436
00:26:04,240 --> 00:26:07,159
Speaker 1: from the equation just a little bit, he created the

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00:26:07,280 --> 00:26:11,680
Speaker 1: Feedback Forum for auction Web. To participate, a user would

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00:26:11,680 --> 00:26:14,919
Speaker 1: first need to register with the Feedback Forum. The purpose

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00:26:15,040 --> 00:26:17,800
Speaker 1: of the forum was to provide feedback to the community

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00:26:18,000 --> 00:26:22,159
Speaker 1: about various buyers and sellers. Media are encouraged people to

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00:26:22,320 --> 00:26:26,040
Speaker 1: praise those who practiced good habits in buying or selling,

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00:26:26,400 --> 00:26:29,080
Speaker 1: and to warn others for those few who might be

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00:26:29,119 --> 00:26:31,720
Speaker 1: taking advantage of the platform or just behaving in a

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00:26:31,760 --> 00:26:35,760
Speaker 1: poor way. He also reminded users that humans don't always

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00:26:35,800 --> 00:26:39,480
Speaker 1: make the right choices and it's not always a malicious

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00:26:39,600 --> 00:26:42,720
Speaker 1: or intended action, so in other words, they should try

447
00:26:42,760 --> 00:26:46,760
Speaker 1: to be understanding and sympathetic before leaping to the conclusion

448
00:26:47,080 --> 00:26:50,200
Speaker 1: that they were getting scammed on purpose. In the forum,

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00:26:50,600 --> 00:26:54,439
Speaker 1: users could rate one another. The rating system was pretty basic.

450
00:26:54,720 --> 00:26:57,479
Speaker 1: You could give a user a plus one, meaning the

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00:26:57,520 --> 00:27:00,200
Speaker 1: experience you had with that user, whether you were dying

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00:27:00,320 --> 00:27:03,880
Speaker 1: from them or selling to them, was a positive experience.

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00:27:04,240 --> 00:27:07,360
Speaker 1: Or you could give a negative rating, indicating something did

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00:27:07,400 --> 00:27:10,480
Speaker 1: not go well, perhaps someone failed to pay or failed

455
00:27:10,520 --> 00:27:13,159
Speaker 1: to send an object, or you could just go with

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00:27:13,320 --> 00:27:16,480
Speaker 1: neutral if there was nothing remarkable to say about the experience.

457
00:27:16,920 --> 00:27:19,840
Speaker 1: They could also expand upon that rating by writing a

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00:27:19,880 --> 00:27:23,679
Speaker 1: comment and explaining the situation further. The rating would become

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00:27:23,800 --> 00:27:27,639
Speaker 1: a tag for each user. Whenever that user interacted with

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00:27:27,720 --> 00:27:30,920
Speaker 1: the site by listing an item or placing a bid,

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00:27:31,200 --> 00:27:34,360
Speaker 1: their rating would appear next to their name. This gave

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00:27:34,440 --> 00:27:37,760
Speaker 1: everyone else a quick glance at who was trustworthy and

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00:27:37,800 --> 00:27:40,440
Speaker 1: who was not. And if your rating got too low,

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00:27:40,880 --> 00:27:43,800
Speaker 1: too low being minus four points, although that was not

465
00:27:44,119 --> 00:27:49,680
Speaker 1: actually uh explained or communicated to the community, then omidi

466
00:27:49,760 --> 00:27:52,560
Speaker 1: are would drop the ban hammer on you. You would

467
00:27:52,720 --> 00:27:57,240
Speaker 1: become known as a not a registered user or nauru

468
00:27:57,520 --> 00:28:00,920
Speaker 1: in a r U. The site also introduced a bulletin

469
00:28:00,960 --> 00:28:04,280
Speaker 1: board system designed to help answer questions in the community

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00:28:04,560 --> 00:28:08,040
Speaker 1: such as what shipping methods would be the most economical

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00:28:08,200 --> 00:28:11,520
Speaker 1: or reliable, and how do you handle situations in which

472
00:28:11,600 --> 00:28:15,639
Speaker 1: something has gone wrong. The community itself would respond to

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00:28:15,680 --> 00:28:19,280
Speaker 1: those messages, so you'd have users answering the questions of

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00:28:19,359 --> 00:28:22,600
Speaker 1: other users. It was almost like auction web had built

475
00:28:22,600 --> 00:28:26,360
Speaker 1: out its own customer service department, but instead of using employees,

476
00:28:26,720 --> 00:28:29,360
Speaker 1: it was the fellow users of the site who were

477
00:28:29,400 --> 00:28:33,920
Speaker 1: doing all the communicating. Six months after auction Web went live,

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00:28:34,240 --> 00:28:37,120
Speaker 1: and just a few months after a Metier had instituted

479
00:28:37,160 --> 00:28:40,520
Speaker 1: the fee for successful auctions, the site was pulling in

480
00:28:40,560 --> 00:28:45,600
Speaker 1: about five thousand dollars per month. In June, Meteor hired

481
00:28:45,600 --> 00:28:49,040
Speaker 1: on Chris Agarbo to come in to a midiers home

482
00:28:49,200 --> 00:28:53,400
Speaker 1: and essentially open up envelopes filled with fees because remember

483
00:28:53,440 --> 00:28:56,160
Speaker 1: these were often small amounts, sometimes just a few cents

484
00:28:56,560 --> 00:28:58,960
Speaker 1: at a time, and the gar pal collected the funds

485
00:28:59,000 --> 00:29:01,600
Speaker 1: and he would deposit them into the business's accounts. So

486
00:29:01,680 --> 00:29:05,080
Speaker 1: essentially he was coming in twice a week, opening up envelopes,

487
00:29:05,160 --> 00:29:07,680
Speaker 1: gathering up money, and going to the bank to deposit it.

488
00:29:08,040 --> 00:29:10,760
Speaker 1: By the end of June, auction web was generating ten

489
00:29:11,080 --> 00:29:14,440
Speaker 1: thousand dollars and so many people were using the site

490
00:29:14,480 --> 00:29:16,800
Speaker 1: and bidding on items. Remember this is just a small

491
00:29:16,840 --> 00:29:21,120
Speaker 1: percentage of those bids so ten dollars that that represents

492
00:29:21,120 --> 00:29:24,640
Speaker 1: a lot of stuff going on. So it was beyond

493
00:29:24,680 --> 00:29:27,480
Speaker 1: anything a Midier had hoped for when he first launched

494
00:29:27,520 --> 00:29:30,480
Speaker 1: this hobby and it changed from hobby to full time job.

495
00:29:30,520 --> 00:29:33,320
Speaker 1: He was making more money overseeing the site than he

496
00:29:33,400 --> 00:29:36,160
Speaker 1: was in his day gig, so he quit his day gig.

497
00:29:36,520 --> 00:29:40,280
Speaker 1: In July, n a Midi are convinced Jeff Skull to

498
00:29:40,400 --> 00:29:43,719
Speaker 1: step up as the first president of auction Web, and

499
00:29:43,760 --> 00:29:47,080
Speaker 1: in August Skull would quit his gig at the newspaper

500
00:29:47,160 --> 00:29:50,520
Speaker 1: chain to focus solely on the company that would become eBay.

501
00:29:51,000 --> 00:29:53,280
Speaker 1: Not keep in mind this is also the year that

502
00:29:53,320 --> 00:29:56,320
Speaker 1: Microsoft would acquire e Shop and turn a Midier into

503
00:29:56,520 --> 00:30:00,160
Speaker 1: a millionaire. But this was just the beginning of which

504
00:30:00,240 --> 00:30:03,520
Speaker 1: is for the French Iranian immigrant. I have a lot

505
00:30:03,600 --> 00:30:06,560
Speaker 1: more to say about that journey, and we will continue

506
00:30:06,600 --> 00:30:09,360
Speaker 1: this story in the next episode. I hope you guys

507
00:30:09,440 --> 00:30:13,560
Speaker 1: have enjoyed the early days of eBay. The story gets

508
00:30:13,760 --> 00:30:16,480
Speaker 1: way crazier as we go on, so I hope you

509
00:30:16,560 --> 00:30:19,080
Speaker 1: joined me for the next episode. If you guys have

510
00:30:19,160 --> 00:30:22,520
Speaker 1: suggestions for future episodes, please let me know send me

511
00:30:22,560 --> 00:30:25,320
Speaker 1: an email. The address for the show is tech Stuff

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00:30:25,360 --> 00:30:27,760
Speaker 1: at how stuff works dot com or draw me a

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00:30:27,800 --> 00:30:30,000
Speaker 1: line on Facebook or Twitter. The handle of both of

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00:30:30,000 --> 00:30:32,800
Speaker 1: those is tech Stuff H s W. Don't forget to

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00:30:32,800 --> 00:30:35,440
Speaker 1: follow us on Instagram and I'll talk to you again

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00:30:36,120 --> 00:30:44,200
Speaker 1: really soon for more on this and thousands of other topics,

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00:30:44,240 --> 00:30:55,719
Speaker 1: because it how stuff works dot com