WEBVTT - The Early Days of eBay 0:00:04.160 --> 0:00:07.160 Get in touch with technology with tech Stuff from how 0:00:07.240 --> 0:00:13.960 Stuff Works dot com. Hey there, and welcome to tech Stuff. 0:00:14.000 --> 0:00:17.040 I'm your host, Jonathan Strickland. I'm an executive producer at 0:00:17.040 --> 0:00:20.040 how Stuff Works and I love all things tech and 0:00:20.079 --> 0:00:24.200 today's episode comes to us the courtesy of a request 0:00:24.239 --> 0:00:26.720 from a listener. Neil asked me to cover this, and 0:00:27.320 --> 0:00:29.319 to start off, I want to just talk about a 0:00:29.360 --> 0:00:34.559 certain myth. There's a legend in Silicon Valley that eBay, 0:00:34.800 --> 0:00:38.600 the auction website that was one of the notable survivors 0:00:38.640 --> 0:00:43.880 after the dot com crash, was founded because of Pez dispensers. 0:00:44.360 --> 0:00:46.800 The legend is a pretty charming one, and it tells 0:00:46.840 --> 0:00:50.720 the story about Pierre A Midier. He's the son of 0:00:50.760 --> 0:00:54.400 Iranians who had moved to France to pursue higher education, 0:00:54.720 --> 0:00:59.080 and Pierre's fiance, Pamela, was a fan of Pez dispensers, 0:00:59.080 --> 0:01:03.240 those little plastic candy dispensing toys that frequently take the 0:01:03.280 --> 0:01:07.160 form of licensed characters like Mickey Mouse or Batman or 0:01:07.840 --> 0:01:12.560 hundreds of others. Pam was having trouble finding fellow enthusiasts 0:01:12.560 --> 0:01:15.600 in the San Francisco area. She had previously lived in 0:01:15.600 --> 0:01:17.880 the Boston area, and she knew a lot of other 0:01:18.040 --> 0:01:21.400 collectors over on the East coast, and so Pierre designed 0:01:21.400 --> 0:01:24.039 a website meant to allow people to post items they 0:01:24.080 --> 0:01:27.080 wished to sell and auction them off to the highest bidder. 0:01:27.480 --> 0:01:30.480 Which is a cute story, but it's not true. It 0:01:30.560 --> 0:01:32.720 was actually all a pr thing that was made up 0:01:33.000 --> 0:01:36.640 to kind of give eBay this sort of charming history. 0:01:36.920 --> 0:01:39.480 So today we are going to explore the full story 0:01:39.560 --> 0:01:42.160 behind eBay, how it came to be, and how it 0:01:42.240 --> 0:01:47.200 survived when so many other websites failed. Our story does 0:01:47.319 --> 0:01:51.000 begin with Pierre omidi Are, the man who would build 0:01:51.040 --> 0:01:55.400 the first incarnation of eBay. He was born in Paris, France, 0:01:55.560 --> 0:01:59.160 in nineteen sixty seven, and when he was six years old, 0:01:59.400 --> 0:02:02.520 his family immigrated to the United States. They moved to 0:02:02.560 --> 0:02:05.800 the Baltimore area, and Pierre's father took up a urology 0:02:05.920 --> 0:02:11.360 residency at Johns Hopkins University. In school, Pierre was known 0:02:11.400 --> 0:02:15.000 to kind of sneak off during gym class in order 0:02:15.080 --> 0:02:18.960 to use the teacher's TRS e D home computer. This 0:02:19.080 --> 0:02:22.919 was an old Tandy radio shack computer, thus the TRS name, 0:02:23.160 --> 0:02:26.320 though it had a rather unfortunate nickname, not just at 0:02:26.880 --> 0:02:31.840 Pierre's school, but worldwide it was sometimes kind of affectionately 0:02:31.919 --> 0:02:35.480 referred to as the Trash eight. Pierre told himself how 0:02:35.520 --> 0:02:39.480 to program in Basic as the basic programming language. He 0:02:39.560 --> 0:02:43.200 was fascinated with computers and with programming in general in 0:02:43.240 --> 0:02:46.440 middle school. He lived for a short while in Hawaii 0:02:46.880 --> 0:02:49.160 and then returned back to the East Coast. When he 0:02:49.200 --> 0:02:52.320 returned to Washington, d c. For high school, he began 0:02:52.440 --> 0:02:56.160 working on Apple two computers and he learned to program 0:02:56.200 --> 0:02:59.120 in Pascal, which was a big step up from Basic. 0:02:59.400 --> 0:03:01.840 He even lay ended a gig at his high school 0:03:01.919 --> 0:03:06.360 computerizing the card catalog for the library. And he graduated 0:03:06.480 --> 0:03:10.119 high school and enrolled in Tufts University, which is outside 0:03:10.160 --> 0:03:13.679 of Boston, and he majored in computer science and that's 0:03:13.720 --> 0:03:18.240 where he met his future wife, Pamela, who was studying biology. 0:03:18.440 --> 0:03:22.679 Pierre was a devotee of Apple, and he eschewed the 0:03:22.720 --> 0:03:26.640 IBM compatible PCs that were beginning to dominate computer labs, 0:03:26.840 --> 0:03:28.880 so he didn't really have any desire to go into 0:03:28.880 --> 0:03:32.079 the computer lab, even though his major was computer science. Instead, 0:03:32.360 --> 0:03:35.600 he preferred to work on a Macintosh computer and he 0:03:35.640 --> 0:03:40.320 created a programming utility as an exercise in his junior year, 0:03:40.360 --> 0:03:44.119 he began looking for a potential job as a Mac programmer, 0:03:44.480 --> 0:03:48.000 and he applied to a company called Innovative Data Design, 0:03:48.160 --> 0:03:51.800 which offered him an internship based off his application and 0:03:51.840 --> 0:03:54.840 the Mac utility he had created. That led to a 0:03:54.920 --> 0:03:58.160 full time position, and Pierre took a semester off to 0:03:58.200 --> 0:04:01.560 get more experience in the programing world. So he leaves 0:04:01.560 --> 0:04:04.200 school for a short while and works for a semester 0:04:04.640 --> 0:04:08.600 in the private sector. He returned to Tufts for another semester, 0:04:09.040 --> 0:04:12.720 but then transferred to the University of California, Berkeley to 0:04:12.800 --> 0:04:17.120 finish out his undergraduate degree, and he moved out West Pamela. 0:04:17.360 --> 0:04:21.240 His girlfriend, slash fiance, continued her studies at the University 0:04:21.240 --> 0:04:24.799 of California, Santa Cruz. She had already earned a bachelor's 0:04:24.800 --> 0:04:29.000 degree in biology and now was studying plant molecular genetics. 0:04:29.640 --> 0:04:33.320 Smart Lady Pierre then went to work for a company 0:04:33.360 --> 0:04:37.479 called Clariss. Interesting little side note, Claris was a subsidiary 0:04:37.520 --> 0:04:40.640 of Apple, so I covered this a little bit in 0:04:40.640 --> 0:04:43.440 the Apple story about how the company was trying to 0:04:43.480 --> 0:04:47.839 deal with software for its Macintosh line. It had formed 0:04:47.920 --> 0:04:51.880 Claris in nineteen seven when Apple needed to devote resources 0:04:51.880 --> 0:04:55.679 to creating updates to aging software packages like Mac draw 0:04:55.839 --> 0:04:59.680 and Mac Project. Pierre was a Mac programmer working for 0:04:59.720 --> 0:05:03.160 Apple sort of by way of a subsidiary, and there 0:05:03.200 --> 0:05:06.240 was a sweet deal that was on the horizon. Claris 0:05:06.360 --> 0:05:09.479 was poised to spin off from Apple and hold its 0:05:09.480 --> 0:05:13.760 own initial public offering or i p O. Employees who 0:05:13.800 --> 0:05:15.920 had a stake in the company would end up making 0:05:15.920 --> 0:05:18.039 a lot of money if the i p O went well. 0:05:18.279 --> 0:05:20.520 So things were looking up, and this is generally how 0:05:20.800 --> 0:05:24.479 initial public offerings go. You normally have employees who have 0:05:24.600 --> 0:05:28.000 some sort of ownership in the company, and when it 0:05:28.080 --> 0:05:32.479 goes public, they end up getting a reward of stock 0:05:32.680 --> 0:05:34.719 in the company. And if the i p O goes 0:05:34.720 --> 0:05:38.719 really well, then the stock's value increases, and thus you 0:05:38.760 --> 0:05:43.920 can end up becoming wealthy overnight. But then in Apple 0:05:44.000 --> 0:05:48.080 decided it was not going to spin off Claris after all, 0:05:48.440 --> 0:05:51.800 and the company would remain a subsidiary under Apple. That 0:05:51.880 --> 0:05:55.960 decision prompted the company president, that is, Clariss's company president, 0:05:56.040 --> 0:06:00.000 to leave Claris, and that initiated something of an exodus 0:06:00.120 --> 0:06:05.120 of employees throughout ninety ninety one, including Pierre. He decided 0:06:05.200 --> 0:06:07.600 he was going to leave the company and try something new. 0:06:08.080 --> 0:06:11.600 So the year was nine and Pierre was partnered with 0:06:11.680 --> 0:06:14.800 some friends to launch their own business. They decided they 0:06:14.800 --> 0:06:18.599 were going to try and create their own company, and 0:06:18.680 --> 0:06:23.280 this one was called Ink Development Corporation. This company specialized 0:06:23.320 --> 0:06:27.000 in programming software for pen based computers, that is, light 0:06:27.040 --> 0:06:30.840 pens as an input device, and specifically they were developing 0:06:30.839 --> 0:06:36.080 for the PenPoint operating system from a company called Go Corporation. Now, 0:06:36.080 --> 0:06:39.320 at the time, Pierre was banking on the pen input 0:06:39.400 --> 0:06:42.400 system to become the next big thing in computing. For 0:06:42.480 --> 0:06:45.440 one thing, using a pen is at least seen as 0:06:45.480 --> 0:06:48.760 being far more intuitive than using a keyboard, same sort 0:06:48.760 --> 0:06:53.480 of thing as touch interfaces with screen based designs like 0:06:53.480 --> 0:06:56.960 like tablets and smartphones. That was the reasoning anyway, But 0:06:57.080 --> 0:06:59.360 it turned out the team was way ahead of their 0:06:59.400 --> 0:07:02.920 time on this bet and it just never really took off. 0:07:02.960 --> 0:07:06.320 But fortunately they had not put all of their eggs 0:07:06.480 --> 0:07:10.200 in the pen computer basket. They had also started to 0:07:10.240 --> 0:07:15.760 develop software for the burgeoning online market in ninety three, 0:07:15.840 --> 0:07:18.920 when it became pretty clear the pen based computing thing 0:07:19.080 --> 0:07:22.640 wasn't going anywhere. The Internet was starting to get a 0:07:22.640 --> 0:07:25.680 lot of buzz and the team rebranded their company and 0:07:25.760 --> 0:07:30.720 called it E Shop lower case E big S. One 0:07:30.800 --> 0:07:33.440 thing that was interesting about the shop was that it 0:07:33.520 --> 0:07:36.800 was not directly connected to the Internet. You would not 0:07:37.360 --> 0:07:40.560 log onto the Internet and then use something like Google 0:07:40.720 --> 0:07:43.400 or some other web search program to go over to 0:07:43.440 --> 0:07:47.760 the shop and then peruse the virtual aisles. It was 0:07:47.800 --> 0:07:50.320 a network, but one that you would have to access 0:07:50.400 --> 0:07:54.480 directly through a Windows application that dialed out through CompuServe 0:07:54.600 --> 0:07:57.480 and Sprint network links. So in other words, instead of 0:07:57.480 --> 0:08:01.080 going to the Internet, you were essentially dialing directly into 0:08:01.120 --> 0:08:04.000 this service. That made it closer to something like a 0:08:04.040 --> 0:08:07.400 bulletin board system from back in the day. Multiple users 0:08:07.440 --> 0:08:10.400 could be on at a single time, but only through 0:08:10.480 --> 0:08:14.720 that direct connection, so it was not yet an Internet shop. 0:08:14.840 --> 0:08:18.160 Pierre figured that the Internet was really the future. He figured, 0:08:18.160 --> 0:08:20.240 this is really where things are gonna go, and he 0:08:20.240 --> 0:08:22.840 was a little frustrated with how reluctant his partners were 0:08:22.880 --> 0:08:26.400 to bring a shop fully online, and so he left 0:08:26.440 --> 0:08:29.440 the company in nineteen but he still held on to 0:08:29.680 --> 0:08:32.760 a stake in the company. He still had some ownership, 0:08:32.840 --> 0:08:35.359 which ended up being a really good decision for him 0:08:35.400 --> 0:08:38.800 because in nineteen ninety six, which was a year after 0:08:39.000 --> 0:08:41.880 eBay would launch. I'm just skipping ahead for a second here, 0:08:42.320 --> 0:08:46.920 Microsoft would acquire e Shop, and that acquisition was done 0:08:46.960 --> 0:08:50.439 in part through stocks, meaning Microsoft would grant stocks to 0:08:50.600 --> 0:08:53.720 people who shared ownership in the shop and they would 0:08:53.720 --> 0:08:57.040 get a certain number of Microsoft shares. That turned Pierre 0:08:57.080 --> 0:09:00.320 into a millionaire overnight. He had the free him to 0:09:00.320 --> 0:09:02.160 work on whatever he liked at that point, and of 0:09:02.200 --> 0:09:05.680 course by then eBay was already a thing. I thought 0:09:05.679 --> 0:09:09.320 it wasn't called that yet anyway. The other thing he 0:09:09.520 --> 0:09:12.120 ended up working on after he left the shop was 0:09:12.679 --> 0:09:17.000 a company called General Magic that was founded by Bill Atkinson, 0:09:17.320 --> 0:09:21.880 Andy Hurtzfeld, and Mark Poor at Now, Hurtzfeld and Atkinson 0:09:22.280 --> 0:09:25.400 were two of the members of the original Macintosh team. 0:09:25.480 --> 0:09:29.320 They actually designed the original Macintosh, and Pierre was gonna 0:09:29.360 --> 0:09:31.520 get to go work for the men who designed the 0:09:31.520 --> 0:09:33.800 computer he had grown to love so much and the 0:09:33.840 --> 0:09:36.760 one that he had cut his teeth on when he 0:09:36.800 --> 0:09:40.360 was really getting serious about programming, so he was pretty 0:09:40.360 --> 0:09:45.760 excited about it. General Magic was developing small handheld computing devices. 0:09:45.800 --> 0:09:49.800 There were sort of a predecessor to personal digital assistants 0:09:49.880 --> 0:09:52.200 or p d a s. If you remember those and 0:09:52.280 --> 0:09:55.719 PDAs in turn were sort of the predecessors for smartphones. 0:09:56.240 --> 0:09:59.239 Pierre's job was to kind of act as a liaison 0:09:59.440 --> 0:10:03.000 between General Magic and third party programmers, so he was 0:10:03.360 --> 0:10:06.000 kind of helping third party programmers who wanted to build 0:10:06.040 --> 0:10:10.200 software for this platform. The platform was called Magic Cap 0:10:10.960 --> 0:10:13.240 and the company had created this in an effort to 0:10:13.280 --> 0:10:17.000 get more software developed for the technology in general. So 0:10:17.040 --> 0:10:20.920 in other words, you had Pierre standing there as kind 0:10:20.920 --> 0:10:24.520 of an aid, someone who could give expertise to people 0:10:24.520 --> 0:10:28.560 who wanted to develop software for this brand new platform, 0:10:28.679 --> 0:10:31.400 and uh, he was deriving a lot of pleasure out 0:10:31.440 --> 0:10:34.640 of that. In his spare time, he was brainstorming ways 0:10:34.679 --> 0:10:37.840 to leverage the Internet. And by the mid nineties, everyone 0:10:37.920 --> 0:10:40.640 was pretty sure the Internet was going to change everything, 0:10:41.320 --> 0:10:43.880 but no one had really cracked how that was going 0:10:43.920 --> 0:10:46.840 to happen yet. It was still an early adoption period 0:10:46.880 --> 0:10:50.160 for the Internet and e commerce hadn't quite taken off yet. 0:10:50.600 --> 0:10:52.640 And this is when the story of Pamela and the 0:10:52.640 --> 0:10:57.160 Pez dispensers would come into play. When it was when 0:10:57.200 --> 0:11:01.720 it was presented as eBay's actual past. But while that 0:11:02.320 --> 0:11:05.360 could have potentially played a part in Pierre's brainstorming if 0:11:05.360 --> 0:11:08.319 it had been true, the actual truth of the matter 0:11:08.600 --> 0:11:12.240 was way more complicated and messy, and I'll explain how 0:11:12.280 --> 0:11:15.240 in just a second, but first let's take a quick 0:11:15.280 --> 0:11:25.640 break to thank our sponsor. So Pierre O Mindiar, who 0:11:25.640 --> 0:11:27.760 had recently left the shop and now was working for 0:11:27.840 --> 0:11:31.880 General Magic, would occasionally take on consulting or freelance work. 0:11:32.280 --> 0:11:35.760 So he created a sole proprietorship business and he called 0:11:35.800 --> 0:11:39.719 it Echo Bay Technology Group because he thought the name 0:11:39.800 --> 0:11:43.880 sounded cool. He didn't actually live anywhere near any place 0:11:43.920 --> 0:11:47.679 called echo Bay. He tried to register the domain echo 0:11:47.760 --> 0:11:51.160 bay dot com but discovered that it was already taken 0:11:51.200 --> 0:11:54.160 so he couldn't have it. So he decided to register 0:11:54.440 --> 0:11:58.880 eBay dot com instead, as that was readily available. And 0:11:58.960 --> 0:12:02.160 this was an early nine there was no market place 0:12:02.400 --> 0:12:05.800 on the site just yet. There was no eBay auction site, 0:12:05.960 --> 0:12:10.000 so the name actually came before the business. At the time, 0:12:10.320 --> 0:12:12.920 eBay dot com was sort of a catch all site 0:12:13.000 --> 0:12:17.320 containing a midier's interests. He had information about his consulting 0:12:17.360 --> 0:12:20.480 gigs on there, so you could hire him based off 0:12:20.520 --> 0:12:23.080 that site, but he also had a section about the 0:12:23.120 --> 0:12:27.520 Ebola virus. It was an information page about Ebola that 0:12:27.600 --> 0:12:31.960 had links to news items. The website contained pages dedicated 0:12:32.000 --> 0:12:36.000 to a biotech company that employed his fiancee, Pamela, and 0:12:36.040 --> 0:12:39.640 he also had a page dedicated to the Alumni Association 0:12:39.760 --> 0:12:44.480 of Tufts University because Pamela was president of that association. So, 0:12:44.520 --> 0:12:47.600 in other words, eBay dot com was sort of a 0:12:47.600 --> 0:12:51.760 hodgepodge of web pages, and really only Pierre and his 0:12:51.800 --> 0:12:55.200 fiance were the common connectors among all the different pages. 0:12:55.240 --> 0:12:59.480 It was actually really reminiscent of a lot of early websites. 0:12:59.559 --> 0:13:01.800 If you were online during the early days of the web, 0:13:01.840 --> 0:13:05.839 you would frequently encounter early websites created by people that 0:13:05.960 --> 0:13:09.040 had a web page devoted to each of their interests, 0:13:09.679 --> 0:13:12.680 and there'd be no real common thread between the interests 0:13:12.720 --> 0:13:16.120 except for the fact that one person had all of them. 0:13:16.200 --> 0:13:18.520 That happened a lot in the early days, and eBay 0:13:18.559 --> 0:13:21.679 dot Com started out that way. Pierre had also been 0:13:21.679 --> 0:13:25.240 thinking a lot about free markets because a few years 0:13:25.240 --> 0:13:29.480 earlier he had decided to invest in the company three 0:13:29.559 --> 0:13:32.600 d O that was a video game console company. I've 0:13:32.600 --> 0:13:34.200 talked about three d O in the past. It was 0:13:34.600 --> 0:13:40.160 one of those consoles that launched. It made a big impact, 0:13:40.480 --> 0:13:43.319 and it was incredibly expensive, and it didn't stick around 0:13:43.320 --> 0:13:46.000 for very long, but it still was pretty interesting and 0:13:46.040 --> 0:13:49.959 Pierre was really kind of fascinated by it, so he 0:13:50.400 --> 0:13:54.360 ended up investing in it back in a mediator put 0:13:54.400 --> 0:13:57.840 in an order to buy stock with his brokerage firm. 0:13:57.880 --> 0:14:01.520 The opening price went three DEO was holding its initial 0:14:01.559 --> 0:14:04.360 public offering was supposed to be fifteen dollars per share, 0:14:04.800 --> 0:14:09.880 but by the time omitt Year's order was processed, the 0:14:10.000 --> 0:14:13.120 stock price had already gone up by fift so he 0:14:13.160 --> 0:14:16.200 was buying it at a more expensive price than he 0:14:16.280 --> 0:14:20.000 had originally intended. Now he was still able to sell 0:14:20.120 --> 0:14:23.160 his stock off at a profit anyway. Later on, but 0:14:23.240 --> 0:14:27.560 it got into thinking how was this fair? Because privileged 0:14:27.600 --> 0:14:30.080 buyers were able to get hold of shares at the 0:14:30.160 --> 0:14:33.800 fifteen dollar price point well before they would become available 0:14:33.840 --> 0:14:37.120 to the general public. You had organizations that could buy 0:14:37.160 --> 0:14:40.760 stock before the I p O officially launched, and he 0:14:40.800 --> 0:14:43.600 felt like this was really unfair. When the public finally 0:14:43.640 --> 0:14:46.400 gets a chance to buy stock, the price would have 0:14:46.400 --> 0:14:49.960 already grown, which means they would see smaller profits than 0:14:50.080 --> 0:14:52.120 the big wigs who were able to get in early 0:14:52.240 --> 0:14:55.800 because they had really good connections. So Pierre started to 0:14:55.840 --> 0:14:59.640 think about auctions and how they operate. He had not 0:14:59.800 --> 0:15:04.000 real the attended auctions, but he liked the concept behind them, 0:15:04.040 --> 0:15:07.440 because at an auction, the potential buyers decide what they 0:15:07.440 --> 0:15:10.600 are willing to spend on any given item or service. 0:15:11.040 --> 0:15:14.240 If someone else wants that item or service more, they 0:15:14.280 --> 0:15:17.800 will pay more, assuming they have the funds to do so. 0:15:17.800 --> 0:15:20.280 So if a seller sets an opening bid price that's 0:15:20.280 --> 0:15:22.720 at too high a level, no one's going to bid. 0:15:23.120 --> 0:15:26.400 So it's a free market approach that felt fair to Pierre. 0:15:26.960 --> 0:15:29.280 You could place your bid, and if you got outbid, 0:15:29.560 --> 0:15:31.800 you could decide if it was worth increasing your bid 0:15:31.800 --> 0:15:34.960 again to stay in the auctions. No one would be 0:15:35.040 --> 0:15:38.440 able to beat out anyone else just because of their connections. Really, 0:15:38.680 --> 0:15:41.720 if someone has deeper pockets and a real desire to 0:15:41.760 --> 0:15:45.840 own something, they could outbid everybody else, But you know 0:15:46.040 --> 0:15:49.080 you and usually way how much is the thing worth 0:15:49.200 --> 0:15:51.000 versus how much am I willing to pay for it? 0:15:51.360 --> 0:15:53.720 He got to work coding in an effort to build 0:15:53.720 --> 0:15:56.320 out a website that would allow people to post items 0:15:56.320 --> 0:16:00.000 for sale and support an auction environment, and he worked 0:16:00.240 --> 0:16:03.360 all over the labor day, weekend and on Labor Day itself. 0:16:03.680 --> 0:16:08.560 In he launched it under his eBay dot Com site, 0:16:09.040 --> 0:16:11.160 but it was not called eBay dot com itself. It 0:16:11.240 --> 0:16:14.520 was called auction Web, so it was one site under 0:16:14.600 --> 0:16:16.880 eBay dot com. I believe it was eBay dot com 0:16:16.960 --> 0:16:19.840 slash a w if you wanted to go there directly 0:16:20.280 --> 0:16:23.520 upon its launch. It was a bare bones service. It 0:16:23.640 --> 0:16:27.360 was mostly blue text against a gray background. There are 0:16:27.360 --> 0:16:29.840 only three things you could do on the site. You 0:16:29.880 --> 0:16:32.920 could list a new item for sale, you could view 0:16:33.000 --> 0:16:35.480 the items that were available, and you could place a 0:16:35.520 --> 0:16:38.600 bid on an item. A media are supported the service 0:16:38.640 --> 0:16:40.840 as a hobby. He had no real plans to make 0:16:40.880 --> 0:16:44.440 it a business. He promoted the site on various news groups, 0:16:44.480 --> 0:16:46.920 but many of them required a moderator to review a 0:16:46.960 --> 0:16:50.280 post before listing a post, and everyone was on vacation 0:16:50.320 --> 0:16:52.880 because it was the long weekend. By the end of 0:16:52.960 --> 0:16:58.240 Labor Day weekend, auction Web had received precisely zero outside visitors. 0:16:58.600 --> 0:17:01.000 But again, this was a hobby, so a media wasn't 0:17:01.040 --> 0:17:04.600 really discouraged. He was just continuing on with his day. 0:17:04.960 --> 0:17:07.400 Word did gradually get out, In fact, it didn't get 0:17:07.640 --> 0:17:09.920 take very long at all. By the middle of September 0:17:09.960 --> 0:17:13.119 people were talking about it, and people began to list 0:17:13.200 --> 0:17:16.000 items for auction on the site. According to the book 0:17:16.160 --> 0:17:20.480 The Perfect Store, a medior visited a newsgroup at misq 0:17:21.040 --> 0:17:24.680 as m I s C Dot for Sale dot non 0:17:24.760 --> 0:17:28.160 computer and gave a complete rundown on all the non 0:17:28.200 --> 0:17:31.679 computer items that were currently up for auction, along with 0:17:31.720 --> 0:17:35.199 their current bids over at auction Web, and here is 0:17:35.240 --> 0:17:37.920 a list of the things that you could have been 0:17:37.960 --> 0:17:43.920 on during that week. Superman Metal lunchbox nineteen sixty seven 0:17:44.160 --> 0:17:48.640 used good condition. The current bid was at twenty two dollars. 0:17:48.720 --> 0:17:53.280 Autographed Marky Mark underwear. Current bid was at four hundred dollars. 0:17:53.840 --> 0:17:58.240 Autographed Elizabeth Taylor photo. Current bid was at two hundred dollars. 0:17:58.760 --> 0:18:02.800 Autographed Michael Jack and poster. Current bid at four hundred dollars. 0:18:03.480 --> 0:18:08.000 A toy power boat late fifties early sixties, current bid 0:18:08.240 --> 0:18:12.520 sixty dollars. A Hubily five twenty cast iron hook and 0:18:12.640 --> 0:18:19.680 ladder truck, current bid three hundred dollars. Collectors multicolor reflection hologram, 0:18:20.080 --> 0:18:25.480 current bid five thousand dollars. A check vase, current bid 0:18:26.000 --> 0:18:30.520 five dollars. And cobalt clear cut glass rose bowl current 0:18:30.560 --> 0:18:35.719 bid twenty five dollars. That was the sum total of 0:18:35.840 --> 0:18:40.359 all the non computer elements, all the non computer items 0:18:40.400 --> 0:18:44.160 that were available on eBay dot com at that point 0:18:44.160 --> 0:18:47.280 eBay dot com slash a W that is, but none 0:18:47.280 --> 0:18:49.960 of those items would be the first one actually purchased 0:18:50.040 --> 0:18:54.840 off of auction web. According to the company's own history, 0:18:54.960 --> 0:18:59.119 the very first item ever bought at auction at eBay 0:18:59.240 --> 0:19:06.320 dot com slash a W was drumroll please, a broken 0:19:06.400 --> 0:19:11.440 laser pointer, a laser pointer that was, as advertised broken. 0:19:12.119 --> 0:19:14.359 What's more, we know who bought it. The name of 0:19:14.400 --> 0:19:18.400 the person who purchased this broken laser pointer was Mark Fraser, 0:19:18.800 --> 0:19:21.600 and I've seen some articles that suggested he was a 0:19:21.600 --> 0:19:24.840 collector of broken laser pointers. In fact, according to at 0:19:24.880 --> 0:19:28.840 least one story, Pierre omidy Are actually called up Mark 0:19:28.880 --> 0:19:32.679 Frasier personally and said, hey, you won this aunction, but 0:19:32.760 --> 0:19:35.840 did you know that this is for a broken laser pointer, 0:19:35.960 --> 0:19:40.679 And supposedly Fraser responded, I collect them. But that's not 0:19:40.720 --> 0:19:44.760 what Mr Fraser has said in interviews following this event. 0:19:45.040 --> 0:19:47.760 According to a video Mark Fraser appeared on as part 0:19:47.760 --> 0:19:51.680 of eBay's twentieth anniversary celebration, the story goes like this, 0:19:52.480 --> 0:19:55.080 Frasier was traveling as part of this job and watching 0:19:55.119 --> 0:19:58.080 a lot of presentations, and at some of these presentations, 0:19:58.400 --> 0:20:01.399 the people were using laser poinners, and Fraser thought they 0:20:01.440 --> 0:20:04.320 were pretty neat, so he wanted one, but at the time, 0:20:04.680 --> 0:20:07.000 they cost more than a hundred dollars and he really 0:20:07.040 --> 0:20:09.280 didn't have that kind of money to spend on something 0:20:09.359 --> 0:20:12.560 as frivolous as a laser pointer. So, being of an 0:20:12.560 --> 0:20:16.080 engineering mindset, he decided he would make his own. He 0:20:16.160 --> 0:20:19.240 got hold of a laser diode and he designed a 0:20:19.280 --> 0:20:23.080 circuit and built his first prototype, but there was a problem. 0:20:23.119 --> 0:20:25.720 The light wasn't focused in a tight beam like a 0:20:25.800 --> 0:20:29.280 laser and that's when he heard about auction web. He 0:20:29.359 --> 0:20:31.760 popped on there and he saw that someone was selling 0:20:31.880 --> 0:20:34.440 a broken laser pointer, and he figured he could get 0:20:34.480 --> 0:20:37.080 the broken pointer and use it to complete his own 0:20:37.160 --> 0:20:39.840 d i Y project, and so he made a bid 0:20:40.119 --> 0:20:43.399 and he won the auction for fourteen dollars and eighty 0:20:43.520 --> 0:20:47.240 three cents, So it's not quite as ridiculous a story 0:20:47.359 --> 0:20:50.560 as some outlets made it out to be. One week 0:20:50.600 --> 0:20:53.480 after a Metier had shared that list of non computer 0:20:53.560 --> 0:20:56.600 items that were available on auction web, he had an update, 0:20:56.920 --> 0:21:01.080 and that included a warehouse in Idaho had an opening 0:21:01.160 --> 0:21:05.520 bid set at three D twenty five thousand dollars. In 0:21:05.560 --> 0:21:09.080 addition to crazy things, auction web was picking up traffic. 0:21:09.440 --> 0:21:12.560 Word was spreading throughout the end of nine and by 0:21:12.560 --> 0:21:15.560 the close of the year, just a few months after launch, 0:21:15.760 --> 0:21:18.840 the site was receiving thousands of visitors and items had 0:21:18.880 --> 0:21:23.320 received tens of thousands of bids. This ended up being 0:21:23.320 --> 0:21:26.960 a problem. However, a Midier was still operating auction web 0:21:27.040 --> 0:21:29.840 as a hobby. He was happy to have it hosted 0:21:29.920 --> 0:21:32.760 under his eBay dot com site. With his other interests. 0:21:32.960 --> 0:21:35.600 He was paying about thirty dollars a month in hosting 0:21:35.600 --> 0:21:39.320 fees for all the sites collectively. But auction web was 0:21:39.359 --> 0:21:43.160 starting to get serious traffic and a Medier's hosting service, 0:21:43.240 --> 0:21:47.800 a company called Best, was complaining that this increased traffic 0:21:47.920 --> 0:21:50.439 was slowing down their network, so they told a Medier 0:21:50.920 --> 0:21:53.840 they were going to transition him to a commercial account, 0:21:54.040 --> 0:21:56.639 which would cost two d fifty dollars a month, not 0:21:56.880 --> 0:22:00.600 thirty dollars a month. A Medior tried to contest the decision. 0:22:00.640 --> 0:22:04.000 He said, auction web isn't a business, and at that 0:22:04.080 --> 0:22:07.320 time it really wasn't It was a marketplace, but it was. 0:22:07.440 --> 0:22:10.240 There was no way to make money from it. There 0:22:10.320 --> 0:22:13.119 was no cut of sales going on. But Best was 0:22:13.160 --> 0:22:16.000 not going to play ball, and a Mediora had a 0:22:16.000 --> 0:22:18.760 tough decision to make. He was gonna have to either 0:22:19.000 --> 0:22:22.400 walk away from this community that was starting to grow, 0:22:23.320 --> 0:22:25.800 knowing that he couldn't really afford to pay two fifty 0:22:25.840 --> 0:22:28.800 dollars a month just to support a hobby. He had 0:22:28.840 --> 0:22:32.600 not yet come into all that money from the acquisition 0:22:32.760 --> 0:22:36.919 of the shop. That hadn't happened yet, So he was 0:22:36.960 --> 0:22:38.639 either gonna have to walk away or he was going 0:22:38.680 --> 0:22:41.360 to have to charge users for auction Web. But how 0:22:41.400 --> 0:22:44.040 would he do it? Well, I'll explain in a second, 0:22:44.040 --> 0:22:47.520 but first let's take another quick break to thank our sponsor. 0:22:54.840 --> 0:22:58.600 A medior didn't want to discourage people from using auction 0:22:58.640 --> 0:23:02.000 Web and he wasn't crazy about the idea of charging 0:23:02.040 --> 0:23:04.879 people a fee to use it. So his solution was 0:23:04.920 --> 0:23:07.399 to create a system in which people could view and 0:23:07.560 --> 0:23:11.320 list items online for free. There was absolutely no charge 0:23:11.400 --> 0:23:14.080 to shop around or put an item up for auction. 0:23:14.520 --> 0:23:17.479 The fee would only come in after an auction ended 0:23:17.560 --> 0:23:20.680 with a successful buyer. At that stage, auction web would 0:23:20.720 --> 0:23:23.639 take a percentage of the final bid. For bids that 0:23:23.680 --> 0:23:26.480 were less than twenty five dollars, auction web would take 0:23:26.480 --> 0:23:29.879 a cut of five percent. For auctions that ended above 0:23:30.000 --> 0:23:33.080 twenty five dollars, the cut would be two point five percent, 0:23:33.160 --> 0:23:35.160 and a medior kind of came up with this on 0:23:35.200 --> 0:23:40.520 his own. Sellers began to send in money after successful auctions. 0:23:40.560 --> 0:23:43.879 Sometimes it came in the form of a check. Sometimes 0:23:43.880 --> 0:23:48.200 a Medior would literally receive cash or change in envelopes. 0:23:48.960 --> 0:23:52.480 It wasn't terribly elegant, but it was working. In fact, 0:23:52.480 --> 0:23:54.920 it was working so well that he was making more 0:23:55.000 --> 0:23:58.159 than the two fifty dollars at cost in hosting fees, 0:23:58.480 --> 0:24:03.240 so auction web was officially a profitable business. By February nine, 0:24:04.520 --> 0:24:07.280