“I started eBay as an experiment, as a side hobby basically, while I had my day job”
Unbelievable fact: “The first item ever auctioned on eBay was a broken laser pointer; Omidyar had bought for $30. Within two weeks, he was amazed to find someone who was willing to pay $14 for it”.
Pierre Omidyar is an all time innovative young iconic entrepreneur of the current decade, seamless technologist, philanthropist, a real definer of the e-commerce, with a hobby of experimenting new ideas, the man behind eBay, took up the reigns of eBay in 1996, as Founder, Chairman, and CEO. Later by 1998, he relinquished all his positions one by one, with Margaret Whitman as his successor CEO; she in turn was replaced by John Donahoe 10 years later, in 2008. Omidyar remains Chairman of eBay. He successfully executed his great ideas, driven by determination and an obsession, to solve the problems of mankind and give them equal opportunity without any differentiation and discrimination, for business transactions of buying and selling on one platform i.e. internet. He is the creator of internet market place for the people around the world. It just resembled the old “Barter System” of exchanging goods for money, the only difference being the media.
A decade down the line after going public, eBay quickly spread around the world like an epidemic, setting its operations in nearly 30 countries, majoring its presence in China and India. Today the company hires more than 15,000 persons to provide full –fledged integration and services to astonishingly resonating broad user base, approximately 90 million active users. eBay.com users worldwide trade $1,877 worth of goods on the site every second. Today eBay enjoys a market capitalization of approximately $40 billion. The stock price of eBay has been consistently growing at the rate of 10% a year, every year. In 2010, eBay's marketplace trading volume amounted to nearly $62 billion in transactions and its payments processing volume amounted to some $92 billion in payments. According to SEC filings, eBay's revenue in 2010 amounted to some $9 billion with approximately $2 billion of operating income. As of September 2011, Forbes states the net worth of Omidyar to be nearly 6.2 billion. This was all possible by the empowering leadership of Omidyar and his human collaboration initiative with e-commerce, which made him a role model for the young strategists and entrepreneurs.
Omidyar stood beside Bill Gates and Warren Buffet, pledging to giveaway not all but 1% of his income for next twenty years. He and his wife Pam have contributed more than $1 billion to programs spanning a range of causes, from poverty alleviation to human rights to disaster relief. Omidyar Network, the philanthropic investment firm he founded with his wife in 2004, is involved in efficient and effective philanthropic practices until date. The Omidyar Network has committed more than $270 million to for-profit and nonprofit organizations that foster economic advancement and encourage individual participation. His unique strategy on philanthropy has earned him a reputation as "The Radical Philanthropist”. Pierre serves on the Board of Trustees of Tufts University, The Santa Fe Institute and The Omidyar Foundation. In November 2005, the couple announced their gift of $100 million to endow the Omidyar-Tufts Microfinance Fund, which was the largest gift in the history of Tufts University at that time. The fund, administered by the Board of Trustees of Tufts University, invests in international microfinance initiatives designed to empower people in developing countries to lift themselves out of poverty.
The Highest eBay sale price yet
Education and Career Outlook
Pierre attended Potomac School, in Washington Dc, where he grew up. His profound interest in computers was cherished in the labs of Punahou School, Honolulu, Hawaii, while he was in 9th grade. He spends much of his time there, trying new things out and interacting with kids to learn from them. He wrote his first computer program at a very young age of 14 to catalog books for the school library. Later he attended St. Andrew’s Episcopal School at Potomac, Maryland, and graduated there in 1984. He got his Bachelor’s in Computer Science in 1988 from Tufts University.
Equipped with his computer’s degree, he began his first job at Claris, a computer subsidiary of Apple Computers Inc, where he developed software called MacDraw, for the Macintosh. Later in 1991 Omidyar, along with three of his friends, co-founded Ink Development Corp, a pen-based computing startup and worked there until 1994 as a software engineer. The company worked on an Internet shopping segment and was renamed eShop later and in 1996, the company was sold to Microsoft. After eShop, Pierre had his career shift to a mobile communication platform company named General Magic, where he worked as developer services engineer.
However, Omidyar remained puzzled and fascinated by the challenges faced by the e-commerce at that time. The creation of his auction site was quite incidental, it started as a help to his wife Pam, to trade and collect Pez candy dispensers. Omidyar encountered many technical problems to establish an online venue for auction of collectible items, person- to- person. Therefore, he created a simple prototype on his personal web page, and launched an online service called Auction Web back in 1995, on Labor Day weekend, for which he acted as a sole proprietor.
The pace, at which the revenues showered the following four months, soon surpassed his salary at General Magic. Omidyar decided to leave General Magic for good and pay full time attention to the new enterprise. At the beginning, the business expanded through word of mouth. The Auction site quickly expanded by and large from collectibles into a vast range of saleable items, including furniture, electronics, home appliances, cars, and other vehicles, and Omidyar stuck a licensing deal to offer airline tickets online. The same year eBay recruited its first employee, Chris Agarpao and first company president, Jeff Skoll, and the company boasted to have 41,000 registered users and a total merchandise sale of $7.2 mn.
In 1997, Omidyar began to advertise the service aggressively, and the company managed to secure $5mn from venture capitalists and the employee head count grew to 41. The registered users grew from 41,000 to 341,000 and the company carried out 200,000 auctions per year. The gross sales per annum exceeded $95mn. A feedback form was added to the Auction Web, through which buyers and sellers mutually interacted directly with each other and rated themselves, for honesty and reliability. The name Auction Web was replaced by its domain name eBay.
In 1998 Omidyar relinquished all the positions he served (CEO, President, Chairman of Board since incorporation) one by one, Margaret Whitman was hired as the new CEO, who launched “My eBay” that allowed both the buyer and seller manage their own accounts. In the same year, the company went public; the share price tripled the very first day, turning Omidyar and Skoll into billionaires. The count of registered users grew to 2.1mn.
In 1999, the company went International; eBay was first launched in Germany, followed by UK and Australia. The company suffered numerous service interruptions some times lasting 22 hours, due to terrific expansion of eBay’s traffic, which was a matter of concern. Omidyar took up many initiatives like, the company made 10,000 phone calls to the site's top users to apologize for the interruption, and to regain the user’s confidence the company assured them that everything possible would be done to keep the site up and running in the future. EBay also introduced an online payment gateway called, Billpoint.
The company had a consistent growth and prosperity, in spite of the dot com bust in 2000 and became no one e-commerce site. In the years 2000-2001, numerous eBay sites were launched in various countries like Canada, France, Austria, Taiwan, Ireland, Italy, Korea, New Zealand, Singapore, Switzerland etc. The employee count rated to 1900, with 22mn potential registered users. EBay reached one of the top eight auction sites. EBay acquired Pay Pal in 2001; later on in 2002-2003 has now become the No1 online payment gateway, with the option of buyer protection. If your purchase item is different from the listing description or not arriving at all, PayPal protects you and you could appeal to PayPal and get your money back.
The company diversified its services in many ways to add value to both the buyers and sellers to avail the benefits of fixed-price and "best offer" sales, and conventional auctions. In 2004, eBay unveiled a technology development centre in China to foster innovation. The company came up with eBay Developers Program, which allows Software Developers to create applications that integrate into the site. In 2005, eBay unveiled a category for purchasing and selling surplus industrial machinery and business equipment. Today eBay is extending its support to many big companies, to set prices for their products and services. The growth continued and in 2009, eBay has revenue reported as $8.7bn. Pierre wanted to come up with new initiatives and innovations that would help humanity. It is due to hard work of Omidyar eBay made its way to fortune 500 companies.
Awards and Honors
This born ideologist with a passion to solve problems of other people, deserve many honors and awards. Here are a few mentioned below:
Lessons from Pierre Omidyar of eBay
After a decade of innovation, Omidyar provides some valuable inputs for the upcoming entrepreneurs.
Psych Yourself Up Not Out
“I was raised with the notion that you can do pretty much anything you want,” says Omidyar. “I always kind of just went ahead and tried things.”
On that fateful Labor Day in 1995, when eBay was launched, Omidyar was doing exactly that – trying something new. eBay was nothing more than an experiment and a side hobby for the budding software engineer. “What would happen within a marketplace if everyone had equal access to information and tools?” Omidyar wondered. “Would a level playing field enable individuals to compete alongside big businesses? What if members managed their own transactions and accountability?” He didn’t know the answers to these questions, but he wanted to find out.
Omidyar wanted to help people to do business directly with one another over the Internet, but there were few who believed his vision would ever work. How people could trust each other enough to do business, wondered his critics. How could they develop relationships with each other when they were relatively autonomous? “I thought that was silly,” recalls Omidyar. “It was a silly concern because people are basically good and honest. Therefore, that was very motivating”. It wasn’t until Omidyar began earning more from this ‘experiment’ than his day job that he realized his trial had paid off, precisely this trial and error process that Omidyar seeks out.
The Path to Success is to Pursue Your Passion
“I was just pursuing what I enjoyed doing. I mean, I was pursuing my passion,” says Omidyar. “It is not really work if you are having fun ...that was the case with me.”
“Like most software people, it is very much passion more than anything else,” says Omidyar. “The ability to create software that could have a benefit or an impact on people that used it was what was driving me.” Once he made the switch to computer science, he began to refine his focus, teaching himself C, and from there, how to program a Macintosh. “I was just very excited about learning everything I could about it,” he says.
Omidyar says don’t. “You should pursue your passion,” he urges. “If you’re passionate about something and you work hard, then I think you will be successful.” On the other hand, Omidyar suggests that if you start a business motivated by money, success will be hard to attain.
“You have to really believe in what you’re doing, be passionate enough about it so that you will put in the hours and hard work that it takes to actually succeed there, and then you’ll be successful,” he says.
Nice Guys Can Finish First
In creating eBay, Omidyar began with five basic values: “We believe people are basically good; we believe everyone has something to contribute; we believe that an honest, open environment can bring out the best in people; we recognize and respect everyone as a unique individual; we encourage you to treat others the way you want to be treated.”
Omidyar’s astounding success with eBay is evidence of the fact that nice guys can finish first in the often-cutthroat business world, where they are normally presumed to be eaten alive. How often does one find a billionaire entrepreneur who, when asked how he achieved his success, recites advice his mother gave him about the necessity of treating people how he would want to be treated in a crowded world. It was that attitude that formed the underlying premise of eBay. “I founded the company on the notion that people were basically good,” says Omidyar, “and that if you give them the benefit of the doubt you’re rarely disappointed.”
Learn to Expect the Unexpected
“Whatever future you’re building, don’t try to program everything,” says Omidyar. “Five Year Plans never worked for the Soviet Union – in fact, if anything, central planning contributed to its fall. Chances are, central planning won’t work any better for any of us.”
When Omidyar first launched eBay, he needed to find a way to make it a self-sustaining system. It was after all just a side hobby, and most of his time had to be dedicated towards his actual paying job. Today, eBay is able to adapt to its user needs with relatively little intervention from the company itself. It was thus almost accidental that eBay was readily suited for rapid growth, but in preparing for the unexpected, Omidyar could come to expect success.
“By building a simple system, with just a few guiding principles, eBay was open to organic growth – it could achieve a certain degree of self-organization,” says Omidyar. “Build a platform – prepare for the unexpected. you’ll know you’re successful when the platform you’ve built serves you in unexpected ways.”
Today, Omidyar believes that the Internet is making it even more necessary for entrepreneurs to be flexible. “The Internet is changing everything, and has changed the world in such a short period of time, and will continue to change things in very positive ways that we have yet to anticipate,” he says. “I’m very excited by the prospect of what we haven’t seen yet.”
Every Business Needs its Cheering Bull
“You'll fail at some things – that’s a learning experience that you need so that you can take that on to the next experience,” says Omidyar. “What you learn from those challenges and those failures are what will get you past the next ones. I was the pretty consistent bull and the cheerleader on eBay actually.”
In mid-1999, it suffered a number of significant public failures. In one instance, the company’s system was down for 22 hours, followed soon after by another eight hours. Both service interruptions were actually caused by the very rapid growth of the company. By that point, eBay had become a relatively large community – so large in fact that CNN satellite trucks positioned themselves in the company’s parking lot to cover the breaking national news. The world was watching and most commentators believed the crisis marked the end for the young company. Customers were upset; many of them had become dependent on the income generated by their sales on eBay.
However, Omidyar refused to give up and he acted quickly to regain his customer’s confidence. The company immediately made 10,000 phone calls to eBay’s top users, apologizing to them for the disruption and assuring them that the site would be up and running again as soon as possible.
“I think failure of that magnitude, or a challenge of that magnitude, is really important and I’m glad that we faced it so early in our evolution,” he says, after which time the company “really woke up to the fact that infrastructure and technology was critical and just really built that organization out.” It took as many as six to nine months, but Omidyar had seen the potential that lay behind eBay and throughout all the challenges, maintained his unwavering faith in the company. He fought for his vision and rallied his troops around it. “I just knew that there’s just nothing that can happen that can make it go away.”
Inspiring quotes by Pierre Omidyar of eBay
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