A Brief Look: The History of eBay
eBay began in San Jose, California, in the fall of 1995 as the brainchild of 28 year old French-born Iranian computer software developer, Pierre Omidyar.
Originally called AuctionWeb, eBay is short for Echo Bay, the name of Pierre’s consulting business Echo Bay Consulting. When Pierre went to register his business domain, echobay.com had already been taken. He shortened the name to ebay.com and the rest is history.
How did the idea come about? Tells the Rest of the Story:
Omidyar hit upon auctions as a fair mechanism for Internet commerce. Sellers could set their minimum prices, and buyers could then determine an item’s market value by bidding up to what they’d willingly pay. Initially, Omidyar ran the small company from his apartment. Since he did not have the time to answer questions by phone, he created message boards that buyers and sellers could use to communicate with one another and establish their reputations. These message boards grew into an elaborate way for people to connect, and they helped to established trust. Early in the 1990s, Pierre had shopped around Silicon Valley’s venture capital firms, but no one was interested. They believed that no one would buy merchandise from an unknown seller!
eBay’s success and popularity today are due in large part to the dedication and work of the individual buyers and sellers who use eBay everyday and it is this very concept of feedback that Omiydar took and turned into the current eBay feedback system that allows buyers and sellers to rate each other, helping minimize fraud by enabling the community to police itself.
From day one, Omidyar built eBay around what remain the company’s core values; a belief that:
- People are basically good
- Everyone has something to contribute
- An open environment brings out the best in people.
In Sept. 1995, the very first item sold on eBay was a broken laser pointer for $14.83. Astonished, Omidyar contacted the winning bidder to ask if he understood that the laser pointer was broken. In his responding email, the buyer explained: “I’m a collector of broken laser pointers.”
eBay’s growth required Pierre to bring aboard Stanford MBA Jeff Skoll in 1996 as the first president of the company and Pierre left his day job to work on eBay fulltime. Shortly thereafter in 1998, then general manager of Hasbro’s Preschool Division, Meg Whitman, was hired on as CEO; a perfect choice as much of eBay’s success has been attributed to her.
In 1997, eBay finally got 5 million dollars in venture capital from Benchmark Capital, and officially changed its name from AuctionWeb to eBay and considered an IPO (Initial Public Offering). By 1998 eBay had gone public, making Omidyar and Skoll billionaires.
eBay’s exponential growth began as word of eBay began to spread from user to user and more and more people began to list their items for sale. By the end of 1996, there were around 41,000 registered users on eBay and 7.2 million dollars worth of goods sold on eBay.
By comparison, in 1997 eBay was hosting more than 200,000 individual auctions per month, compared with 250,000 auctions in all of 1996. Registered users now topped 341,000. At the end of 1998, eBay had 2.1 million users, selling 740 million dollars worth of merchandise. At the end of 1999, ebay had 10 million users selling 2.8 billion dollars of goods.
By 1999, eBay began to expand into foreign markets with culturally distinct eBay Web sites opening in United Kingdom, Australia, France, Italy, South America, Korea, and mainland China.
Starting in 2000, eBay began to acquire companies to complement their business model such as Half.com, Paypal, Rent.com, Shopping.com, Skype, Kijiji, and Verisign merchant gateway. By the end of 2006, eBay had grown to 222 million users, selling more than 52 billion dollars worth of goods.
Today, eBay continues to grow and expand globally. Though other companies such as Yahoo!, Amazon and Overstock.com have tried to compete, eBay has continued to enjoy the lion’s share of the marketplace.