The Great Leaders Series: Pierre Omidyar of eBay
Pierre Omidyar didn't just launch a hugely successful business. He had a hand in the creation of thousands of companies. As the founder of web auction giant eBay, Omidyar built a totally transparent retail community online, one that was governed by its users and so trustworthy that it enticed a wave of new entrepreneurship online.
It all started in 1995 when Omidyar, a 28-year-old with a computer science degree, wrote the program for an online auction site, then called Auction Web. "I wanted to give the power of the market back to individuals," Omidyar told Business Week in 2004. By June of 1996, the company had $10,000 in monthly revenues and its first employee. A year later it secured a multi-million dollar round of venture capital funding. The site made money by taking a small fee for each listing and a slice of the final sales price. Profit margins were high and, unlike other web startups, the model meant that the company wasn't hemorrhaging money while it found its footing.
In building his auction empire, Omidyar counted on the power of the individual. Rather than play referee in squabbles between buyers and sellers, he created a Feedback Forum and various message boards, on which both buyers and sellers could rate their experiences, share feedback, trade tips, and solve problems. Omidyar even hired one particularly active poster as the company's first customer support representative, reinforcing the idea that eBay users knew best how the site should work.
The online auction model allowed even the smallest sellers to have a more global reach. Suddenly 'eBay seller' became a legitimate and, in some cases, a lucrative job. Larger retailers got on to the site too, seeing it as a tool to help them push through inventory faster. 'EBay is truly the world's bazaar," Judy Olian, Dean of UCLA's Anderson School of Management, told Inc. in 2009, "...a marketplace without boundaries of scale or place.'
Despite eBay's rapid growth and culture-changing significance, Omidyar has tended to dodge the spotlight. Unlike many of his peers, he felt he knew his limits as an entrepreneur and was happy to bring in a more seasoned manager to help bring the company to scale. So in 1998, he hired Meg Whitman. She guided eBay through an IPO, international expansion, numerous acquisitions including PayPal, and several well-publicized site crashes. As a result, the company emerged from the first dot-com industry implosion with hardly a scratch. (Omidyar remains chairman today; Whitman retired from the company and plans to run for governor of California in 2010.)
In recent years, Omidyar has been a devoté of Twitter, where he tweets about his love of Nespresso coffee, recent travels, looming flu pandemics, and technology. He has also stepped into the role of philanthropist. Omidyar and his wife plan on giving away most of their multi-billion dollar fortune. In 2004, the couple started the Omidyar Network, a hybrid foundation and for-profit investment vehicle that focuses on microfinance and social networks. It has made investments in social media sites including Digg and Meetup as well as numerous organizations that make loans or assist microfinance lenders, showing that Omidyar still believes in the foundation he laid out at eBay.
As an entrepreneur, Omidyar's greatest stength is his insight into human nature. He understood that people would buy just about anything—one man's junk is, in fact, another's treasure. (Proof of concept: eBay's very first transaction was for a broken laser pointers). And he also understood this: Given the right tools, individuals are in the best position to carve their own destiny.