eBay

eBay

Buying power


Founder: Pierre Omidyar





Age of founder: 28


Background: Software engineer


Founded in: 1995, USA


Headquarters: California, USA


Business type: Online auction site




F



ifteen dollars might seem an insignificant amount, but it was the sum of money that sparked the business known today as eBay, the global auction site with $11.7 billion (£7.6 billion) in revenue.



Founder Pierre Omidyar, a software engineer, was experimenting with online auctions as a hobby and advertised a broken laser pointer for sale. He was amazed that someone would consider paying just under $15 ($14.83 to be precise) for an item that didn't work, and it convinced him that there was potential in a business that catered to people's passion for collecting.


The laser pointer was duly sold and dispatched and has gone down in history as eBay's first transaction. Today eBay is the world's largest online marketplace and one of the most successful companies of the dot-com era – and is still making headlines around the world.


Technology guru


Born in Paris, Pierre moved with his family to Washington, DC in 1973 when he was six years old, and he was fascinated by computers and technology from an early age. While other kids were out playing sports, he was more likely to be found indoors tinkering with hardware and learning how to program computers. He taught himself to program in BASIC and used his technology skills to get his first job, computerising his school library's card catalogue for $6 an hour.


Unsurprisingly, Pierre later decided to major in computer science at Tufts University near Boston, where he nurtured a passion for Apple software. It was an early sign of his entrepreneurial flair and desire to do something different. At the time, Apple was seen as a trendy, non-traditional technology company, a minnow challenging established giants such as IBM. With a beard, sunglasses and his long hair tied back in a ponytail, Pierre sported a look that was well suited to his love of Apple.


In the late 1980s and early 1990s, he worked as a Macintosh programmer, securing a number of jobs at software companies in Silicon Valley before deciding to venture out on his own. Together with friends he founded Ink Development Corporation, which aimed to produce software for pen-based computers, forerunners of the Palm Pilot. This part of the business, however, did not take off as rapidly as he had hoped, and a year later Pierre decided to focus on another offshoot of the business – online commerce. The company was subsequently renamed eShop, and it operated as an electronic retailing company. While the concept of the internet was gathering momentum around the world, the pace of technology was still too slow for Pierre's liking, and he quit eShop in 1994 in order to pursue a business that would propel him one step closer to the internet. Pierre retained a stake in eShop, however, and in hindsight this proved to be a wise move. Barely two years later, eShop caught the attention of software giant Microsoft, which acquired the company and made Pierre a millionaire before his 30th birthday.


All things internet


By this point, Pierre had caught the internet bug. Luckily, he was in the right place at the right time, as a host of other online businesses were now starting to emerge. Pierre cultivated his interest in the internet by joining mobile communications start-up General Magic. It was during his time here that the idea for AuctionWeb, which would eventually become eBay, took shape. Like many great business ideas, Pierre's creation stemmed from a bad personal experience. A few years earlier, he had placed an order online for shares in a company that looked promising, but he soon discovered that the stock had soared by 50% before his order had been fulfilled.


He thought it unfair that some buyers were favoured with one price, while others had to settle for another. Pierre believed an online auction was a better way of arriving at a fairer price for all concerned, and with the development of the internet such a concept could become a reality. 'I've got a passion for solving a problem that I think I can solve in a new way', he said at the time. Pierre wanted to test the web's ability to connect people around the world and offer a platform where buyers and sellers could share information about prices and products.


'Instead of posting a classified ad saying I have this object for sale, give me $100 (£63), you post it and say, "Here's a minimum price"', he once said, recalling his early strategy in an interview. 'If there's more than one person interested, let them fight it out.'


The bigger picture


It was going to take time and patience to develop his business idea, but Pierre relished such a challenge and worked around the clock, holding down his day job during the week and working on AuctionWeb in his spare time in the evenings and at weekends. In fact, he wrote the initial code for eBay in one weekend. It was a labour of love and an all-consuming hobby. With his concept for an online auction, Pierre wanted, above all, to promote the idea of a community on the internet, one that was built on fairness and trust.