Speaker 1: Get in touch with technology with tech Stuff from how
Speaker 1: stuff works dot com. Hey there, and welcome to tech Stuff.
Speaker 1: I'm your host, Jonathan Strickland. I'm an executive producer at
Speaker 1: how Stuff Works in a love all things tech. And
Speaker 1: now that we get all the cell of Brayton out
Speaker 1: of the way, we got the birthday cake cleared out
Speaker 1: of the studio, all the balloons are out of here,
Speaker 1: we can get back to business now. Before we started
Speaker 1: celebrating tech stuffs tenth anniversary, I was talking about eBay
Speaker 1: and I did a couple of episodes about it. So
Speaker 1: let's do a quick recap before we continue our story.
Speaker 1: eBay was created by Pierre A. Midier. Originally it was
Speaker 1: called auction Web and that was underneath a larger website
Speaker 1: called eBay that had other stuff on it, including an
Speaker 1: Ebola virus page. And a. Medier had created it as
Speaker 1: sort of a hobby. He had not anticipate did it
Speaker 1: becoming a business. He just wanted to create a fair
Speaker 1: market place for exchanges for auctions because he felt that
Speaker 1: there was a need for that and he had a
Speaker 1: cool idea of how to implement it. He had to
Speaker 1: start charging a small fee for successful auctions in order
Speaker 1: to offset his web hosting service. There was so much
Speaker 1: traffic going to auction Web after the first few months
Speaker 1: that his web hosting service said, Hey, we're gonna have
Speaker 1: to charge you for a business website as opposed to
Speaker 1: a personal one. So you're gonna have to pay two
Speaker 1: U fifty dollars a month in order to keep this
Speaker 1: site active. So in order to offset that, he started
Speaker 1: putting in a small listing fee for any successful auction,
Speaker 1: so if an auction completed, he would take a small
Speaker 1: percentage of that in order to offset those costs. But
Speaker 1: he ended up making enough money from auction Web to
Speaker 1: make that his full time gig, so he quit his
Speaker 1: day job and auction Web a k a a became
Speaker 1: his main job. It became his full time occupation. He
Speaker 1: brought on a friend to help run the business, and
Speaker 1: later they brought on Meg Whitman to run it. She
Speaker 1: became the president and CEO of eBay. Whitman prepared eBay
Speaker 1: for its initial public offering or i p O. That's
Speaker 1: when you list on a stock exchange and you sell
Speaker 1: shares in your company, and that i p O was
Speaker 1: successful enough to turn a medier into a billionaire, so
Speaker 1: he was wealthy beyond his imagining at that point. In
Speaker 1: about a year after the company went public, eBay had
Speaker 1: a site wide outage that lasted nearly twenty four hours
Speaker 1: and required a quick response from the company. I'll talk
Speaker 1: a little bit later in this episode about the infrastructure
Speaker 1: they created to try and prevent that from ever happening again,
Speaker 1: and some other quick backtracking that I need to do
Speaker 1: because I got up to two thousand two in our
Speaker 1: last episode, but I skipped over a couple of things
Speaker 1: that I think they weren't mentioning. One thing I did
Speaker 1: not mention in the last episode is how in two
Speaker 1: thousand eBay created a class it calls eBay University. This uh.
Speaker 1: This course teaches people the best practices for listing items
Speaker 1: on eBay, how to sell them effectively, how to create
Speaker 1: a business using eBay as a foundation. And this would
Speaker 1: allow people to leverage eBay while eBay also is able
Speaker 1: to get an advantageous relationship out of it, so it's
Speaker 1: kind of a symbiotic relationship. The user is able to
Speaker 1: expand their reach and use eBay's tools like marketing and
Speaker 1: listing and all this sort of stuff in order to
Speaker 1: get their goods out to a wider audience. So let's
Speaker 1: say that you actually have an antique store, and maybe
Speaker 1: you're antique store is on a little like it's a nice,
Speaker 1: little quaint antique store that's off a little road. You
Speaker 1: know you're you're going to only get traffic occasionally from that.
Speaker 1: People don't tend to go out of their way. But
Speaker 1: by using eBay, you could have your entire inventory up
Speaker 1: online as well, and even set things aside when you
Speaker 1: decide to auction off specific things in your inventory that
Speaker 1: could become your full time business. And you could use
Speaker 1: eBay's tools to market, to reach out to potential customers,
Speaker 1: all this sort of stuff. So there's a big benefit
Speaker 1: to the small business owner. But in turn, eBay benefits
Speaker 1: because of course it takes a small portion of all
Speaker 1: the sales. And of course there's also some other listing
Speaker 1: fees that happened these days if you're listing a lot
Speaker 1: of different items. I'll talk more about that in the
Speaker 1: next eBay episode. So classes at eBay University are actually
Speaker 1: held throughout the world. It's not a specific location that
Speaker 1: you have to go to, and they're led by members
Speaker 1: of the eBay community who have a lot of experience
Speaker 1: in this. Also in two thousand, eBay acquired another business
Speaker 1: called half dot Com. Half dot com allowed people to
Speaker 1: sell certain things in limited categories like textbooks, video games, movies,
Speaker 1: and music, and you had to do it at a
Speaker 1: set price. So it's not an auction. It's a fixed
Speaker 1: price approach, but you get to choose what the prices
Speaker 1: as the seller um as a store with a bunch
Speaker 1: of independent vendors. You can think of it that way.
Speaker 1: So let's say that you wanted to sell a specific textbook,
Speaker 1: you could actually go onto half dot com and search
Speaker 1: to find out if anyone else was selling that same
Speaker 1: sort of textbook and what price they had said it at,
Speaker 1: what the average price was, and this would help you
Speaker 1: determine what price to set your textbook. Maybe you go
Speaker 1: a little under because you really want to get rid
Speaker 1: of this thing. Maybe you go a little overthinking eventually
Speaker 1: someone's gonna pay for it. Half dot Com took a
Speaker 1: commission for any sale, and sellers were responsible for shipping
Speaker 1: the actual items within three business days of a sale
Speaker 1: going through. And oddly enough, even though eBay would acquire
Speaker 1: PayPal in two thousand two, eBay would not incorporate PayPal
Speaker 1: into half dot com until twenty so that was kind
Speaker 1: of weird that they delayed so long to put PayPal
Speaker 1: functionality in half dot com. eBay stated it would operate
Speaker 1: half dot com as a separate entity, maintaining its business model,
Speaker 1: which was pretty much true until when eBay shut down
Speaker 1: Half dot com, so it is no more. In November
Speaker 1: two thousand, eBay introduced the buy it Now feature that
Speaker 1: allows buyers to purchase an item at a set price
Speaker 1: rather than play the auction game. And of course it's
Speaker 1: up to the buyer to set this, so if a
Speaker 1: buyer doesn't set a buy it now price, it's just
Speaker 1: a normal auction. But this gave buyers options. They could
Speaker 1: try to purchase the item at less than the buy
Speaker 1: it now price by going through the auction, but then
Speaker 1: they could risk being sniped out of a purchase, or
Speaker 1: they could just go ahead and buy it for the
Speaker 1: asking price. So for example, I might have a lovely
Speaker 1: Vause up on eBay and the minimum bid for the
Speaker 1: auction is twenty dollars, but the buy it now price
Speaker 1: is fifty dollars, So if you really like that Vause,
Speaker 1: you could buy it for fifty bucks, or if you
Speaker 1: felt I feel pretty good about this, I don't know
Speaker 1: that a lot of people are looking at this. I'm
Speaker 1: gonna go ahead and put in the minimum bid of
Speaker 1: twenty bucks and you could just try and buy it
Speaker 1: for that, and if the auction expires at the end
Speaker 1: of the set time and you are the highest bidder
Speaker 1: at twenty bucks, you just saved yourself thirty dollars. So
Speaker 1: it's kind of a a game almost, or it's you know,
Speaker 1: a bar of a risk sort of thing, depending on
Speaker 1: how you want to look at it. But it gave
Speaker 1: options to buyers. eBay also released an a p I
Speaker 1: that is an application programming interface. They did that in
Speaker 1: two thousand that lets developers create their own apps to
Speaker 1: interact with eBay. So, uh, it lets you have some
Speaker 1: functionality with eBay, and you can do it in different ways.
Speaker 1: You can incorporate it into different websites, that kind of thing.
Speaker 1: In two thousand one, and this is on eBay's own
Speaker 1: corporate history, a special auction saw a pair of blue
Speaker 1: jeans sell for more than forty six thousand, five hundred dollars.
Speaker 1: Think about that, Dory, a pair of blue jeans that
Speaker 1: cost forty sillars. What those genes. By the way, we're
Speaker 1: the oldest pair of Levi's known to exist. The auction
Speaker 1: was partly presented by the History Channel. And who was
Speaker 1: the lucky bidder who put forward nearly fifty grand for
Speaker 1: a pair of jeans? And he guesses, and he guesses. Try,
Speaker 1: you're gonna guess. R is not guessing. Give me a guess.
Speaker 1: Who would put up fifty grand for a pair of
Speaker 1: blue jeans? Levi's Vintage Levi's, They date from eighteen eighties. Tarry,
Speaker 1: you gotta you gotta be faster than this. You gotta
Speaker 1: be faster. People can't listen to this. It was actually
Speaker 1: the Levi s. Trouss Company, the company that made the
Speaker 1: blue jeans, paid fifty thou dollars or nearly fifty thou
Speaker 1: dollars to buy the blue jeans. That is the most
Speaker 1: expensive refund I have ever heard. Actually, they just wanted
Speaker 1: it so that they would have these vintage genes, and
Speaker 1: they planned on making replicas essentially of the genes and
Speaker 1: selling them. The jenes, like I said, were dated to
Speaker 1: the eighteen eighties, which means that Jack the Ripper could
Speaker 1: have worn them, but he probably didn't because he probably
Speaker 1: didn't wear blue jeans at all. eBay also launched the
Speaker 1: eBay Store in June two thousand one that allowed sellers
Speaker 1: to create a virtual storefront that would hold all their
Speaker 1: listings as well as let them put branding on the
Speaker 1: page to differentiate their stores from other people's stores, and
Speaker 1: it eventually included marketing tools for users as well, like
Speaker 1: email newsletters. So this gave people who had an eBay
Speaker 1: account the chance to have their own virtual storefront. So
Speaker 1: instead of just listing things on eBay, so you have
Speaker 1: maybe you've listed twenty different things on eBay, but they're
Speaker 1: all kind of just random and they don't appear in
Speaker 1: any one location. It's just if people happen to be
Speaker 1: searching for that particular type of item, then you're listing
Speaker 1: might pop up. But having a virtual storefront, people could
Speaker 1: actually go through all the things you have listed on
Speaker 1: eBay and it's almost like you are your own little,
Speaker 1: tiny store. And in fact you could be if you
Speaker 1: had stuff that you were making, for example, and you
Speaker 1: wanted to make it available on eBay, you could have
Speaker 1: your own little storefront. So this really changed things up
Speaker 1: a lot too. Now we're finally back up to two
Speaker 1: thousand two, and I realized that was a lot of
Speaker 1: stuff I left out of my last episode. But during
Speaker 1: that last episode I felt the trajectory toward the PayPal
Speaker 1: acquisition was really important. As for that acquisition, David O. Sachs,
Speaker 1: who was the CEO and the product leader of PayPal
Speaker 1: at the time of the acquisition, wrote a great piece
Speaker 1: on Cora That's the Question and Answer website about why
Speaker 1: PayPal chose to sell to eBay, Why why did PayPal
Speaker 1: want this acquisition to take place? Well, at the time,
Speaker 1: PayPal was working hard to scale up because payment processing
Speaker 1: businesses are only really profitable if they scale, and eBay
Speaker 1: represented the majority of all payment volume on PayPal, two
Speaker 1: thirds of all transactions. eBay also had other payment solutions
Speaker 1: connected to its service, not just PayPal, so you could
Speaker 1: pay through credit cards, their eBay had its own proprietary
Speaker 1: approach and others, and so there was a possibility that
Speaker 1: eBay could end up taking PayPal off that list or
Speaker 1: push other people to use its own proprietary approach, and
Speaker 1: that PayPal would suffer as a result. Eventually, now eat
Speaker 1: paypals off eBay volume. The stuff that people are using
Speaker 1: PayPal four that doesn't involve eBay at all would be
Speaker 1: larger than their eBay volume. But in two thousand two
Speaker 1: it was a different story. So if eBay were to
Speaker 1: flip that switch, if they were to say, let's really
Speaker 1: push people to this other proprietary approach, that could have
Speaker 1: possibly hamstrong PayPal enough so that the company would have
Speaker 1: failed because two thirds of their volume was going through eBay,
Speaker 1: so they were really dependent upon eBay. In addition, according
Speaker 1: to Sachs, PayPal was anticipating some legal battles over the
Speaker 1: use of the service in association with stuff like gambling sites. Now,
Speaker 1: there was nothing illegal about the arrangement that PayPal had,
Speaker 1: but there was a perception that politicians in the United
Speaker 1: States in particular were arming up to take a swing
Speaker 1: at online gambling and that they might argue that PayPal
Speaker 1: was enabling gamblers. And so when the opportunity came, PayPal
Speaker 1: ended up agreeing to this acquisition deal with eBay in
Speaker 1: order to join forces with the company so that PayPal
Speaker 1: could survive and grow. eBay would benefit from that as well.
Speaker 1: Of Obviously, now it's gonna be fun to revisit that
Speaker 1: topic when I get up to two thousand fourteen, because
Speaker 1: that's when PayPal and eBay parted ways. And I'll explain
Speaker 1: all about that and why it happened in the next episode.
Speaker 1: In two thousand three, eBay continued making acquisitions of other
Speaker 1: auction and commerce online companies, including a Chinese commerce company
Speaker 1: called each Net, and it continued to grow and add
Speaker 1: more users. At this time, and play Jim Uncle Griff
Speaker 1: Griffin published a book called the Official eBay Bible, which
Speaker 1: was a manual to help buyers and sellers make the
Speaker 1: most effective use out of eBay. Oh and also that year,
Speaker 1: weird Al Yankovic came out with a little ditty called
Speaker 1: eBay and it was a musical parody of the song
Speaker 1: I Want It that Way by some group called the
Speaker 1: Backstreet Boys. Now I'm not gonna sing that song because
Speaker 1: you guys have done nothing wrong and don't deserve to
Speaker 1: have that happen to you. But I am going to
Speaker 1: read some of the lyrics to you just so that
Speaker 1: you can kind of get a feel for this song.
Speaker 1: So the song opens like this, A used pink bathrobe,
Speaker 1: a rare mint snow globe, a Smurf TV tray I
Speaker 1: bought on eBay. My house is filled with this crap
Speaker 1: shows up in bubble wrap most every day. What I
Speaker 1: bought on eBay? Tell me why I need another pet rock,
Speaker 1: Tell me why I got that alf alarm clock. Tell
Speaker 1: me why I bid on Shatner's old to pay they
Speaker 1: had it on eBay. And a little bit later in
Speaker 1: that song, he has this bit, I am the type
Speaker 1: who is liable to snipe you with two seconds left
Speaker 1: to go? WHOA got PayPal or visa? Whatever will please
Speaker 1: you as long as I've got the dough. So he
Speaker 1: did a really great job making jokes out of the
Speaker 1: stuff that was very much part of eBay culture. In fact,
Speaker 1: I haven't really talked about what sniping is yet in
Speaker 1: these episodes about eBay, and I guess I probably should.
Speaker 1: Sniping was this practice of sitting on an auction and
Speaker 1: watching the time run down and then placing a bit
Speaker 1: just before the auction expires, and you were said to
Speaker 1: snipe it because you would outbid the previous bidder just
Speaker 1: before the auction ended. But this is actually a little
Speaker 1: more tricky than it sounds because the way eBay allows
Speaker 1: for automatic bidding. I'll explain that more in just a second,
Speaker 1: but first let's take a quick break to thank our sponsor. Alright,
Speaker 1: so we're back, and let's talk quickly about how bidding
Speaker 1: works on e basis. I haven't really covered that yet
Speaker 1: before we jump back into the history of the company.
Speaker 1: In an eBay auction, the auction will last a set
Speaker 1: amount of time, and you get to choose what that
Speaker 1: time is. The seller can select an auction to last one, three, five, seven,
Speaker 1: or ten days, and typically the seller will also create
Speaker 1: a reserve price that's the minimum bid the seller will
Speaker 1: accept as a purchase price for the item. And the
Speaker 1: seller can also choose a buy it now price, which
Speaker 1: would allow someone to outright purchase the item for that
Speaker 1: price rather than bid on it and start up in auction.
Speaker 1: Or you might not set a buy it now price,
Speaker 1: and you might not do it in the hopes of
Speaker 1: people going bonkers and bidding up the price to a
Speaker 1: really high amount, much higher than what you would have set.
Speaker 1: So it's kind of a a risk versus reward thing now.
Speaker 1: In normal auctions in the real world, like physical auctions,
Speaker 1: typically the auctioneer, who I think, by law must be
Speaker 1: able to speak at a speed that defies belief, will
Speaker 1: call for bids until the bids trickled down to a halt,
Speaker 1: at which point the auctioneer calls for the end of
Speaker 1: the auction of that particular piece, and the person who
Speaker 1: made the final bid wins. So you just keep going.
Speaker 1: And so an auction can last a really long time
Speaker 1: or be really short, And of course by wins, I
Speaker 1: mean the person now has to cough up the actual
Speaker 1: dough to buy the thing that was being auctioned off.
Speaker 1: Now an eBay auctions have a predefined end time. They
Speaker 1: don't just go when the bids trickle out, So the
Speaker 1: auction will continue to go until it reaches it's cutting
Speaker 1: off point, or the seller chooses to ind the auction early,
Speaker 1: and at that moment, whomever made the highest bid wins
Speaker 1: the auction. Moreover, you can make a bid on an
Speaker 1: item and to side what you're willing to pay for
Speaker 1: it at max. From the very beginning, let's say I'm
Speaker 1: on eBay and I see a listing for an original
Speaker 1: Deities and Demi Gods source book for Advanced Dungeons and Dragons,
Speaker 1: and I think, holy cow, that's the source book that
Speaker 1: still has Lovecraft monsters in it has characters from Michael
Speaker 1: Moorecox l Rick Saga in it. This was before the
Speaker 1: copyright lawyers forced TSR to change it. I have to
Speaker 1: have this book. I decide that I am willing to
Speaker 1: pay up to a hundred dollars for this source book
Speaker 1: because I'm a collector and the current bid is let's
Speaker 1: say thirty five dollars. Now, my new bid does not
Speaker 1: automatically make the price jump from thirty five dollars to
Speaker 1: one hundred dollars. Instead, eBay will reference whatever the maximum
Speaker 1: bid was for the person who set the thirty five
Speaker 1: dollar amount, and if thirty five dollars was the maximum,
Speaker 1: eBay will bump up the price to a small amount
Speaker 1: above thirty five dollars. Let's say it's in five dollar increments.
Speaker 1: So if someone else bids again to you, but they
Speaker 1: bid below your one dollar maximum, you will automatically outbid
Speaker 1: them a little higher than their bid. So let's stick
Speaker 1: with my example to explain this better. And let's consider
Speaker 1: this scenario. Um, Matt Frederick and I are in a
Speaker 1: bidding war for this a D and D source book.
Speaker 1: This is a totally believable scenario. By the way, he
Speaker 1: has placed a bid on the item before me. I
Speaker 1: haven't even seen it yet. He saw it any bid
Speaker 1: on it, and when I go to the item, I
Speaker 1: see that the current bid price is thirty five dollars.
Speaker 1: Now what I don't know is that Matt Frederick's full bid,
Speaker 1: the maximum bid is actually fifty dollars. It's showing me
Speaker 1: thirty five dollars because that's the lowest increment above whatever
Speaker 1: the reserve price was. So I place my maximum bid
Speaker 1: of one hundred dollars, and this is what I am
Speaker 1: willing to pay for that source book. It's kind of
Speaker 1: what I feel like is my maximum. I don't want
Speaker 1: to go over a hundred. When I place my bid,
Speaker 1: it's as if Matt and I are in a really
Speaker 1: fast paced bidding war. So his bid of thirty five dollars,
Speaker 1: I up it up to forty dollars, but because he's
Speaker 1: has maximum said it fifty, it automatically bumps up again.
Speaker 1: So his final bid of fifty dollars finally gets up there,
Speaker 1: and then my bid, because I said my maximum is
Speaker 1: a hundred, would go out to fifty five dollars. eBay
Speaker 1: handles all this automatically. I don't have to do anything
Speaker 1: except set what my maximum bid is. So the new
Speaker 1: price to beat appears to be fifty five dollars. Now,
Speaker 1: let's say Matt checks in on the auction and he
Speaker 1: sees that he's been outbid and by me, of all people.
Speaker 1: So he sees the new price is fifty five dollars,
Speaker 1: and he thinks, well, and I'm willing to go out
Speaker 1: to sixty, so he bids sixty dollars. eBay processes this,
Speaker 1: but it sees that I have already said a maximum
Speaker 1: bid of one hundred dollars. So the price bumps up
Speaker 1: to sixty dollars for Matt, but then automatically bumps up
Speaker 1: again to sixty five dollars for me, and it would
Speaker 1: keep doing this until it hit my maximum of a
Speaker 1: hundred dollars. If someone bid more than that. Let's say
Speaker 1: that Matt goes crazy and he decides to bid a
Speaker 1: hundred and five dollars, then I would be outbid and
Speaker 1: I would be out of the auction unless I came
Speaker 1: back to continue this bidding war. The nice thing about
Speaker 1: this is you can set an amount you're comfortable with
Speaker 1: and then just walk away. So if you win the auction,
Speaker 1: chances are you're going to win at a level below
Speaker 1: your maximum, like in that example. I was just giving.
Speaker 1: If I bid a maximum of a hundred dollars but
Speaker 1: Matt was not willing to go above sixty five, I
Speaker 1: would not be charged the full one dollars. I would
Speaker 1: be charged sixty five dollars for that. That That would be
Speaker 1: the winning bid. So that's nice. You actually would quote
Speaker 1: it not really save money, but you wouldn't spend as
Speaker 1: much as you were willing to spend. And if you lose,
Speaker 1: you don't end up spending more than you wanted to
Speaker 1: on the item because you had already set your maximum,
Speaker 1: assuming that you just said it and walked away. However,
Speaker 1: winning is a pretty awesome experience, and so a lot
Speaker 1: of people may find themselves returning to the auction to
Speaker 1: increase their bids over what their maximum was as they
Speaker 1: see an auction start to get away from them. And
Speaker 1: that happens all the time, and it's also kind of
Speaker 1: dangerous behavior, so you gotta be on the lookout for that.
Speaker 1: And because that's how bidding works, it makes sniping a
Speaker 1: little tricky. Because let's say that I see that the
Speaker 1: current bid is thirty five dollars for this sourcebook, and
Speaker 1: Matt Frederick has set that that winning bid, so far,
Speaker 1: and there's only two minutes left in the auction, and
Speaker 1: I think, perfect. Now I'm gonna go in snipe it.
Speaker 1: I'm gonna put in forty dollars. I'm gonna win, but
Speaker 1: I don't know that Matt has already put in a
Speaker 1: fifty dollar maximum. If I wait too long to snipe,
Speaker 1: then all I'm really gonna do is drive the price
Speaker 1: up a little bit and make Matt pay more for
Speaker 1: the source book than he thought he was going to
Speaker 1: have to, which I admit has its own sort of
Speaker 1: sweet poetry. Making Matt Frederick have to spend more money.
Speaker 1: It warms my heart a little bit, but it doesn't
Speaker 1: get me that source book. So that was also part
Speaker 1: of the strategy, as if you were going into snipe
Speaker 1: and item, you had to be ready to go quickly
Speaker 1: because if you did a higher bid and then found
Speaker 1: out that the person's automatic maximum bid was still higher,
Speaker 1: you had to keep going up until you reached a
Speaker 1: point where you were no longer comfortable bidding. So before
Speaker 1: I get back into the history, let's talk a little
Speaker 1: bit about how stuff works on the back end at eBay.
Speaker 1: Because I mentioned earlier than they had that outage. Well,
Speaker 1: eBay now depends upon a grid computing system to support
Speaker 1: their service. They have several hundred database servers in several
Speaker 1: different areas and they store all the information on the
Speaker 1: site and there's redundancy in the system, so you have
Speaker 1: multiple computers that are actually holding the exact same information,
Speaker 1: including all the listings that are on eBay. And that
Speaker 1: is because if one server or set of servers were
Speaker 1: to crash, another could pick up the load and service
Speaker 1: would not be interrupted. You would continue to have access
Speaker 1: to eBay even though entire servers were down because you
Speaker 1: have this redundancy built in and they could jump in
Speaker 1: to take the place of the servers that crashed. This
Speaker 1: is one of the things the company did to make
Speaker 1: sure alledges would not happen again like they did back in.
Speaker 1: The database servers hold all the information, but two other
Speaker 1: groups as servers support this. There are application servers. There
Speaker 1: are search servers. These are the machines that handle the
Speaker 1: interactions between users and the data stored on the databases.
Speaker 1: So you can think of them kind of like employees
Speaker 1: who go from point of sale to a warehouse to
Speaker 1: actually bring inventory to customers. And then you have the
Speaker 1: web servers. That's the actual interface itself that users encounter
Speaker 1: when they visit eBay, whether they are to trying to
Speaker 1: list an item for sale or they're trying to bid
Speaker 1: on something, or just visit their profile. But that's the
Speaker 1: basic infrastructure, all right. Now, it's time to get back
Speaker 1: to the history. And in two thousand four a few
Speaker 1: things happened. One was that Jeff Jordan's became the president
Speaker 1: of PayPal, which again was operating under eBay. At this point.
Speaker 1: Jordan's had been a scene year vice president and general
Speaker 1: manager for eBay's North America division for several years. He
Speaker 1: had played an instrumental role in acquiring PayPal back in
Speaker 1: two thousand two, and he would be president of PayPal
Speaker 1: for two years. He would step down in two thousand six.
Speaker 1: He would later go on to be president and CEO
Speaker 1: of Open Table, and today he's a venture capitalist. Also
Speaker 1: in two thousand four, eBay purchased another company called rent
Speaker 1: dot com, which is a website related to rental housing.
Speaker 1: It was founded in Atlanta, Georgia, my hometown back in
Speaker 1: nine of course, back then it was called Viva dot Com.
Speaker 1: eBay made the purchase for four hundred fifteen million dollars
Speaker 1: in an exchange that included cash and stock. But eBay
Speaker 1: would eventually sell rent dot Com to another company that
Speaker 1: today is called rent Path LLLC, but at the time
Speaker 1: it was going by the name Prime Media Incorporated. The
Speaker 1: sale was reported to be four round one forty five million,
Speaker 1: So yikes. You know they bought it for four fifteen
Speaker 1: million in two thousand four and then sold it a
Speaker 1: couple of years later for a million adds a loss.
Speaker 1: But finally, one other story I want to hit from
Speaker 1: two thousand four is a very odd one. You know
Speaker 1: already talked about blue jeans. Let's talk about grilled cheese sandwiches. Yep.
Speaker 1: And two thousand four, a woman in South Florida sold
Speaker 1: a partly eaten grilled cheese sandwich on eBay and it's
Speaker 1: sold for get ready for this tari twenty eight thousand
Speaker 1: dollars for a partly eaten grilled cheese sandwich. Now, the
Speaker 1: reason why was because the grilled cheese sandwich had a pattern,
Speaker 1: or apparently had a pattern on it. It's really just
Speaker 1: random coloration, but still it was. There was some colors
Speaker 1: on this grilled cheese sandwich that gave a shape that
Speaker 1: suggested it could be the image of the Virgin Mary,
Speaker 1: so I say to this sweet cheese is the buyer?
Speaker 1: By the way, was an online casino site called Golden
Speaker 1: Palace dot com, which bought several of the stranger items
Speaker 1: that have been posted to eBay as part of a
Speaker 1: museum of weird kind of thing. I think in our
Speaker 1: final episode on eBay, our next one, I will have
Speaker 1: to conclude by talking about some of the strangest stuff
Speaker 1: that's ever been bought on eBay, which honestly could probably
Speaker 1: be an entire series all by itself. I've got more
Speaker 1: to say about eBay, but first let's take another quick
Speaker 1: break to thank our sponsor. In two thousand five, eBay
Speaker 1: brought on John Donahoe as the president of eBay market Places,
Speaker 1: and he would later serve as the president and CEO
Speaker 1: of the company after Meg Whitman's departure. eBay also created
Speaker 1: a classified business called Kigigi and I'm sure I'm mispronouncing that,
Speaker 1: but it's from a Swahili word for village. This began
Speaker 1: as a startup business within eBay itself. It was spearheaded
Speaker 1: by employees of eBay, so it's kind of like a
Speaker 1: startup incubator within eBay. It was bolstered by more acquisitions,
Speaker 1: starting with a British online classified service called gum Tree
Speaker 1: and a Spanish service called low Quo, and in the
Speaker 1: United States this service would morph into eBay Classifieds. In
Speaker 1: it's still called Kajiji in several countries, however, also just
Speaker 1: to stick with this for a little bit longer, the
Speaker 1: division had a stake in a competitor classified site, a
Speaker 1: little site that you might have heard of called Craig's List.
Speaker 1: That stake amounted to about twenty eight percent ownership of
Speaker 1: the online classified site. But Craig's List and eBay have
Speaker 1: had a let's call it a contentious relationship over the years,
Speaker 1: and each company has accused the other of various forms
Speaker 1: of skullduggery in general shenanigans, and ultimately this resulted in
Speaker 1: eBay selling back the ownership stake it had in Craig's List.
Speaker 1: In in September two thousand five, Eba turned ten years old.
Speaker 1: I know what that feels like. In an effort to
Speaker 1: protect their business model and help people who depend upon
Speaker 1: eBay for their own businesses, the company created a division
Speaker 1: called main Street. The purpose of main Street is to
Speaker 1: educate communities about the various legislative moves that could impact
Speaker 1: the way online commerce works. It's kind of a grassroots
Speaker 1: campaign to get people involved in that sort of stuff,
Speaker 1: and it's an advocacy group which is definitely serving eBay's interests,
Speaker 1: but at the same time it also helps those who
Speaker 1: have built viable small businesses using eBay as their storefront
Speaker 1: to protect themselves. So I could be all cynical about
Speaker 1: this and say, well, here's a big corporation, multibillion dollar corporation,
Speaker 1: and it's leveraging average people to advocate on its behalf,
Speaker 1: and that's the cynical way to look at it. And
Speaker 1: in fact, eBay does benefit from this. I mean they're
Speaker 1: looking out for themselves. However, the name sure of eBay's
Speaker 1: business means that if eBay were to go away, a
Speaker 1: lot of those average people would find themselves back at
Speaker 1: square one. Their way of making a living would go away.
Speaker 1: So I don't really get as cynical about this. I mean,
Speaker 1: everyone has a stake in it, so I think it's
Speaker 1: actually a pretty responsible move on eBay's part. In October
Speaker 1: two thousand five, eBay, under the leadership of Meg Whitman,
Speaker 1: made another big move. This one raised criticism at the time,
Speaker 1: and perhaps in hindsight you could call it a foolish
Speaker 1: move to make, although it wasn't nearly the kerfuffle that
Speaker 1: some have made it out to be. That move was
Speaker 1: to acquire the communications company Skype. Skype was founded back
Speaker 1: in two thousand three as a telecommunications software product that
Speaker 1: focused on voice and video calls. You know, in case
Speaker 1: you've never used it. The deal with eBay ultimately meant
Speaker 1: Skype was acquired for about three point one billion dollars.
Speaker 1: Two point five billion of that was in upfront hash
Speaker 1: and stock, and the rest was in uh future transactions,
Speaker 1: but ultimately it ended up being about a three point
Speaker 1: one billion purchase price. Now, Whitman had hoped that Skype
Speaker 1: would create a new way for eBay users to communicate
Speaker 1: with one another, that it could be built directly into
Speaker 1: eBay's interface, and rather than emailing back and forth about
Speaker 1: items that are up for auction or for sale, users
Speaker 1: would be able to connect directly in a real time
Speaker 1: communication session. You could have potential buyers and sellers talk
Speaker 1: face to face, Questions could be answered efficiently and personally,
Speaker 1: and you'd be less likely to misinterpret something. Once you
Speaker 1: could detect stuff like tone and body language. But there
Speaker 1: was one tiny little problem. Hardly anyone was using it.
Speaker 1: It was a failed integration. Tech journalist Tom Keating said
Speaker 1: in a piece that was published on PC World that
Speaker 1: eBay users tended to want to be anonymous. They preferred
Speaker 1: to keep things at a distance. They might contact a
Speaker 1: seller to ask for more information, but typically they would
Speaker 1: do so in a way that did not involve direct
Speaker 1: real time communication. And I can kind of get this
Speaker 1: because when I call up a company, I'm actually relieved
Speaker 1: to get an automated system where I can just push
Speaker 1: a button and get the information I need. I know
Speaker 1: that I'm not inconveniencing anyone, and that the system isn't
Speaker 1: going to judge me for being dumb if I ask
Speaker 1: a simple question. At least, I hope the robots aren't
Speaker 1: doing that yet, give me a couple more years, robots.
Speaker 1: The culture of both Skype and eBay was a big
Speaker 1: clash as well. At that point, Skype was operating more
Speaker 1: like a loose startup, whereas eBay had already started to
Speaker 1: establish a very corporate culture. Meg Whitman's leadership had really
Speaker 1: transformed it from the wild West startup into more of
Speaker 1: a departmentalized, compartmentalized corporation, and so those two things were
Speaker 1: clashing quite a bit, and eBay kept shuffling around the
Speaker 1: management team over at Skype while trying to find the
Speaker 1: best fit, and that meant Skype was really struggling to
Speaker 1: find itself, to find a rhythm and an identity. Ultimately,
Speaker 1: eBay decided to sell most of its ownership of Skype
Speaker 1: in two thousand nine to a group of private investors,
Speaker 1: and the investors bought about six of the ownership of
Speaker 1: Skype and eBay retained the rest of it. They paid
Speaker 1: one point nine billion dollars to buy that part of Skype,
Speaker 1: and Brad Stone of The New York Times wrote that quote,
Speaker 1: the online calling service Skype has thrown off the last
Speaker 1: of the shackles that limited its growth and potential as
Speaker 1: a unit of eBay end quote. Ouch analysts looked at
Speaker 1: this move as one of eBay trying to make the
Speaker 1: best out of a bad situation. Jeffrey Lindsay, who is
Speaker 1: an analyst, called eBay's purchase of Skype a quote serious,
Speaker 1: a stake by Meg Whitman end quote, and an attempt
Speaker 1: to buy growth. Now, of course, a lot of companies
Speaker 1: have bought growth in the past, like instead of trying
Speaker 1: to develop new businesses or go into new markets, they
Speaker 1: buy another company and they grow that way. This is
Speaker 1: something that happens a lot in business. It's not uncommon,
Speaker 1: so I don't really think of it as a valid
Speaker 1: criticism because plenty of companies have done this. But in
Speaker 1: this case, it just didn't pan out. So in retrospect,
Speaker 1: sure you could say this was a bad choice, but
Speaker 1: that's in retrospect. And at first it looked like eBay
Speaker 1: was really going to take a bath on this acquisition
Speaker 1: and come out with a loss because they had already
Speaker 1: sold sixty of Skype, and at a much lower price
Speaker 1: than what they spent to buy Skype in the first place.
Speaker 1: But then in Microsoft stepped in to purchase Skype. They
Speaker 1: wanted it outright, they wanted all ownership of Skype, and
Speaker 1: they paid eight point five six bill in dollars total
Speaker 1: for it, and that thirty or so that eBay had
Speaker 1: retained was suddenly worth a whole lot of money. After
Speaker 1: taxes and debts and all that other mess. It amounted
Speaker 1: to a bit less than a billion dollars, but it
Speaker 1: meant that Ultimately, eBay was going to come out ahead
Speaker 1: on the Skype deal once everything was said and done.
Speaker 1: It just took two different acquisitions for that to happen. Now,
Speaker 1: it doesn't mean that the deal was a great one
Speaker 1: for eBay, but it also doesn't make the Skype acquisition
Speaker 1: one of the worst deals in tech history. It ultimately
Speaker 1: didn't fit, but it wasn't a blown move like News
Speaker 1: Corps buying my Space for five million and then selling
Speaker 1: it for less than fifty million. It wasn't as bad
Speaker 1: as all that. Now, I'm going to end this episode
Speaker 1: in two thousand six, and our next episode will bring
Speaker 1: us from that point up to date with eBay and
Speaker 1: how it's running today. But in two thousand and six,
Speaker 1: the most expensive item ever sold through through the auction
Speaker 1: site was auctioned off kind of. I'll explain why kind
Speaker 1: of in just a second. But it was a giga
Speaker 1: yacht that sold for one hundred sixty eight million dollars.
Speaker 1: That is insane. So what the heck was this giga
Speaker 1: yacht like? And what the heck is a giga yacht? Well,
Speaker 1: a giga yacht is a giant yacht, and you probably
Speaker 1: gathered that from the name and I'm looking at a
Speaker 1: concept photo of this beast and I am flabbergasted. So
Speaker 1: it was designed by Frank Mulder, who is a naval architect,
Speaker 1: and uh, at this point, it's still a design. But
Speaker 1: here are some of the stats on this design. The yacht,
Speaker 1: if it's ever built, will measure four hundred five ft long,
Speaker 1: that's about a hundred twenty three meters. The design has
Speaker 1: a multi level v I P state room as seven
Speaker 1: guest rooms, including a children's stateroom. It has a spa
Speaker 1: that includes a gym, and it has an office and
Speaker 1: a movie theater and a glass elevator and a swimming
Speaker 1: pool and a helicopter pad, and a garage that can
Speaker 1: actually have a ski boat and two tender boats in it.
Speaker 1: You can also launch a submarine from dry dock. And
Speaker 1: according to one source, the master suite would be three
Speaker 1: thousand square feet, which is insane. I don't know if
Speaker 1: that's true or not, because it was just in this
Speaker 1: one source, And when I went to Molder's actual website,
Speaker 1: I could not find any information about how big the
Speaker 1: VIP suite actually is, so I don't know where they
Speaker 1: got that information. The purchaser on this auction is an
Speaker 1: oil tycoon from Russia named Roman Abramovich. He made the
Speaker 1: winning bid. Technically, the winning bid was for a fifty
Speaker 1: down payment of eighty five million dollars on eBay. He
Speaker 1: was the second bid on that auction. The first bid
Speaker 1: was ten dollars. I presume that did not meet the
Speaker 1: reserve asking price. Now, according to Molder designed, this is
Speaker 1: still in that design phase and hasn't even started construction yet,
Speaker 1: so there's no I have no idea that this thing
Speaker 1: is ever even going to be built or what the
Speaker 1: status is on the payment. It could be the whole
Speaker 1: deal fizzled out, in which case the most expensive thing
Speaker 1: ever purchased on eBay might be a little further down
Speaker 1: the list. Also in two thousand and six, Rajiv Duta
Speaker 1: would move over as president of Skype to assume the
Speaker 1: position of president of PayPal, and PayPal would launch its
Speaker 1: first mobile application that year. That brings us up to
Speaker 1: the end of two thousand six and eBay. In our
Speaker 1: next episode, we will finish out cover more than a
Speaker 1: decade's worth of information. I'm not going to break it
Speaker 1: down quite as granular granul early year by year as
Speaker 1: I have in this episode, but uh I definitely will
Speaker 1: cover all the big points, such as Meg Whitman's departure
Speaker 1: from the company and what has happened since then, and
Speaker 1: we'll also talk about some of the crazy stuff that's
Speaker 1: been bought on the site. I hope you guys are
Speaker 1: enjoying this series. If you have any suggestions for future
Speaker 1: episodes of tech Stuff, whether it is a person, a company,
Speaker 1: a technology, maybe there's someone you want me to have
Speaker 1: on to interview or perhaps a guest host, let me know.
Speaker 1: Send me an email. The address is tech Stuff at
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