Pierre Omidyar Interview (page: 5 / 8) Founder and Chairman, eBay	Print Interview

Along the way, inevitably there are detours, there are disappointments, there are failures. If you have not suffered those, maybe the right question for you is not, "How do you deal with failure?" Maybe the right question is, "How do you deal with success?"

Pierre Omidyar: I'll tackle both sides of that question. I knock on wood every time I think about it, because I think we were really blessed with a great community of people that embraced the idea and embraced the values. It's all about treating each other the way you want to be treated yourself so that you can do business with one another. The business just grew on its own, and we just had to get out of the way and let it grow.

I know that the job of a typical entrepreneur is a lot harder than that, because I had done that before. I was a cofounder of another company before eBay. So we had it a lot easier than most. When we went to raise money, rather than trying to convince people to invest in eBay, we had to tell people to stop knocking on the door. We had our selection and we made a choice and found a strategic partner, and we took their money and we put it in the bank and we never touched it. It's been mostly success, especially in the early days of eBay. The enormous growth and success brought a lot of challenges, too.

You can't predict growth and success -- no one in their right mind would predict 30 percent growth for another year every month -- I mean, monthly growth for another year. So we were behind on a lot of things and a lot of the infrastructure, and we had some fairly public failures in the middle of '99, and where our systems went down for 22 hours and then went down for eight hours after that. And we had a very large community then. Not as large as today obviously, but still very large, front page news. We had CNN satellite trucks in the parking lot. I mean, it was big, big. "The world is watching, this company is gone. It's going away." And 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, because Meg, who is the CEO -- I brought on Meg in March of '98 -- she really woke up to the fact that infrastructure and technology was critical and just really built that organization out over the next -- it was a six to nine month process for us to kind of get over that. And so I think those challenges are also really critical and really important. And what you learn from them is, of course, kind of what they say, "If it doesn't kill you, it makes you stronger," and it's true. And what you learn from those challenges and those failures are what will get you past the next ones.
[ Video ] Low High    [ Audio ] Quicktime	[ Key to Success ] Perseverance

Did you have any doubts? Did you have fears of failure?

Pierre Omidyar: I was the pretty consistent bull and the cheerleader on eBay actually. I just felt -- once I realized the human connection that people were making with one another over the service -- I just knew that there's just nothing that can happen that can make it go away. And even after a massive outage like that, you really anger your community, they are depending on -- a lot of them are dependent on us at that time for their livelihood and still do today -- so it's really a hardship. Even after that, they come back and they say, "Okay, well, we know you're doing your best. We're with you." And so I've always had, you know -- I've always had kind of this unshakable faith that it's going to endure.
[ Video ] Low High    [ Audio ] Quicktime	[ Key to Success ] Courage

Is this the Silk Road of the 21st Century? Is this how we are going to do business?

Pierre Omidyar: I hesitate to say that eBay or the Internet is the way all business is going to be done, all business is going to move to electronic commerce. Not at all. You still want to go to the mall, and you still want to socialize there. There's a definite value and a reality to the real world experience.

What eBay did really was to create a new market, one that wasn't really there before. And that was a global market for the kind of goods that were usually traded at flea markets and garage sales and this kind of thing, and that was the format. That was the start of it, and it hadn't existed before, and now it has progressed past that into consumer electronics, computers. You know, a lot of people don't know that, and I'll put a plug in for my business here, but they don't know that kind of every category that we're in -- in addition to collectibles -- we're the number one leader in terms of the dollars traded in that category on the Internet, except for books and music because there's another company that's pretty good at that. But I mean consumer electronics, computer equipment, sporting goods, everything, jewelry. It's just unbelievable. So that base of -- kind of the full market base -- has really evolved into a market for pretty much everything.
[ Video ] Low High    [ Audio ] Quicktime

That raises another question you've had to deal with, and that is your responsibility for what is sold on eBay. It may be true that 95 percent of the people or more can be trusted. What about the other small percentage?

Pierre Omidyar: I founded the company on the notion that people were basically good, and that if you give them the benefit of the doubt you're rarely disappointed. And I'm thankful that, in fact, statistics have borne that out to be true. And it is actually 99.999 percent of our transactions happen without a case of reported fraud. There are 30 cases out of every one million transactions where somebody actually goes to the trouble to report fraud, so presumably there's some unreported level as well that's higher than that and people don't bother. But that is -- there's no word to describe it. It's far more than a large majority or most, or whatever. I mean, it's practically all transactions without a problem. Now, as the absolute number of transactions have gone up -- this is another challenge that we faced -- is that the absolute number of problems has also gone up, and so with the attention that is paid on the company -- I mean, you can open the newspaper on any given day and read about the latest problem that's related to eBay somehow. Whether it's some kind of strange new item being offered on the site, or an illegal item or whatever. And so we've had to evolve our strategies and our policies from what I built in the beginning, which was a self-policing community of people, to one where we take a more active role in trying to help identify the bad actors. We work with the authorities to go find them and make sure they don't come back and this sort of thing.
[ Video ] Low High    [ Audio ] Quicktime	[ Key to Success ] Integrity

But nothing yet has shaken your faith in human nature?

Pierre Omidyar: No. This is the first time we have statistical proof. It's a wide open marketplace, and yet only 30 out of one million transactions! And it's amazing, that ratio has stayed true since we first started measuring it in January of '98. It was like 27 that month. So even as the number of transactions has exploded, that ratio is still true.

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