EBay - Origins and History

Origins and History

The online auction website was founded as AuctionWeb in San Jose, California, on September 5, 1995, by French-born Iranian-American computer programmer Pierre Omidyar (born on June 21, 1967) as part of a larger personal site that included, among other things, Omidyar's own tongue-in-cheek tribute to the Ebola virus. One of the first items 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." The frequently repeated story that eBay was founded to help Omidyar's fiancée trade Pez candy dispensers was fabricated by a public relations manager in 1997 to interest the media, which were not interested in the company's previous explanation about wanting to create a "perfect market". This was revealed in Adam Cohen's 2002 book, The Perfect Store, and confirmed by eBay. Chris Agarpao was hired as eBay's first employee and Jeffrey Skoll was hired as the first president of the company in early 1996. In November 1996, eBay entered into its first third-party licensing deal, with a company called Electronic Travel Auction to use SmartMarket Technology to sell plane tickets and other travel products. Growth was phenomenal; in January 1997 the site hosted 2,000,000 auctions, compared with 250,000 during the whole of 1996. The company officially changed the name of its service from AuctionWeb to eBay in September 1997. Originally, the site belonged to Echo Bay Technology Group, Omidyar's consulting firm. Omidyar had tried to register the domain name echobay.com, but found it already taken by the Echo Bay Mines, a gold mining company, so he shortened it to his second choice, eBay.com.

In 1997, the company received $6.7 million in funding from the venture capital firm Benchmark Capital.

Meg Whitman was hired as eBay President and CEO in March 1998. At the time, the company had 30 employees, half a million users and revenues of $4.7 million in the United States. eBay went public on September 21, 1998, and both Omidyar and Skoll became instant billionaires. eBay's target share price of $18 was all but ignored as the price went to $53.50 on the first day of trading.

As the company expanded product categories beyond collectibles into almost any saleable item, business grew quickly. In February 2002, the company purchased IBazar, a similar European auction web site founded in 1993 and then bought PayPal on October 14, 2002.

By early 2008, the company had expanded worldwide, counted hundreds of millions of registered users, 15,000+ employees and revenues of almost $7.7 billion. After nearly ten years at eBay, Whitman decided to enter politics. On January 23, 2008 the company announced that Whitman would step down on March 31, 2008 and John Donahoe was selected to become President and CEO. Whitman remained on the Board of Directors and continued to advise Donahoe through 2008. In late 2009, eBay completed the sale of Skype for $2.75 billion, but will still own 30% equity in the company.

In July 2010, eBay was sued for $3.8 billion by XPRT Ventures that accused eBay of stealing information shared in confidence by the inventors on XPRT's own patents, and incorporated it into features in its own payment systems, such as PayPal Pay Later and PayPal Buyer Credit.

On December 20, 2010, eBay announced its acquisition of a German online shopping club, brands4friends.de, for €150 million ($197 million) to strengthen the company's interests in the fashion industry in Europe. It is subject to regulatory approval and expected to close it in the Q1 2011.