Inside eBay

The Perfect Store
by Adam Cohen

A New York Times Notable Book of the Year.

In this brisk, engaging chronicle of one of the most stunning success stories in American business history, Adam Cohen takes us inside eBay the corporation as well as into the community of eBay's passionate users. His book reveals the many surprising ways in which eBay's "virtual marketplace" has indelibly changed not only the face of American business but the cultural landscape of the twenty-first century.

Chapter 1

Pierre Omidyar was born in Paris in 1967 to a French-Iranian family that placed a premium on intellectual pursuits. Omidyar's parents had been sent to France by their families as young adults to get a better education than was available in Iran in the early 1960s. Omidyar's father attended medical school; his mother studied linguistics at the Sorbonne. They met for the first time in their adopted land-an encounter that was all but inevitable, given the size of the city's Iranian community — and eventually married. When Pierre, their only child, was six, they emigrated to the United States so that his father could begin a urology residency at Johns Hopkins University in Baltimore.

Growing up in and around Washington, D.C., Omidyar was a typical American child, except for his early fascination with computers. In seventh grade, Omidyar used to sneak out of gym class and make his way to the unlocked closet where his science teacher stored a cheap Radio Shack TRS-80. While his classmates played dodgeball and practiced layups, he used the "trash 80," as it was known, to teach himself to program in BASIC. Omidyar lived in Hawaii during eighth and ninth grades, while his mother did linguistics fieldwork. When he returned to Washington, he graduated to an Apple II, and he was programming in PASCAL, a step up from BASIC. Omidyar used his skills to get his first paying job, computerizing his school library's card catalog for six dollars an hour. "I was your typical nerd or geek in high school," he says. "I forget which is the good one now."

Omidyar arrived at Tufts University, a few miles from Boston, in the mid-1980s, just as the tech world was about to explode. His major was computer science, and his passion was Apple programming. At the time, identifying with Apple was a statement of personal values as much as a choice of technology — the computer-lab version of participating in a 1960s march on Washington. Under the charismatic leadership of Steve Jobs, Apple had styled itself as a hip, iconoclastic alternative to IBM and the other computer behemoths. Apple's view of itself was captured in a now-legendary 1984 Super Bowl commercial in which a lone woman, pursued by storm troopers, hurled a hammer at a Big Brother figure on an enormous television, shattering the screen. Omidyar did his own small part to rebel against mainstream computing by staying out of the Tufts computer lab, which was stocked with PCs, and working from his dorm room on a Macintosh. He eventually wrote his first Mac programmer's utility, a tool for use by other programmers.

In his junior year, Omidyar decided he wanted to spend the summer as a Macintosh programmer. He searched ads in Macworld and sent out letters to companies that used the Mac platform, enclosing a copy of his programmer's utility as a work sample. Omidyar got an interview, and a summer internship in Silicon Valley with Innovative Data Design, one of the first companies to write programs that allowed Mac users to draw images with their computer. The internship led to a full-time job, and he took off the fall semester to keep at it. Omidyar fit in easily in Silicon Valley's programmer subculture. With his ponytail, beard, and aviator-style glasses, he had the look. He also had the worldview. Omidyar was politically libertarian, and he liked talking about philosophy, UFOs, and space aliens. After one more seamester at Tufts, Omidyar moved out West for good, finishing up his undergraduate degree at the University of California-Berkeley.

After he left Innovative Data Design, Omidyar took a job at Claris, an Apple subsidiary that developed consumer-applications software. Claris was supposed to be headed to an IPO, but while Omidyar was there it ended up being reabsorbed by Apple. The change in plans led to a mass exodus of talent, and Omidyar was among those who headed out the door. For his next venture, Omidyar teamed up with friends, including a former Claris colleague, in 1991 to found a startup called Ink Development Corporation. Ink Development was producing software for what looked like the next big thing in technology: pen-based computers. The thinking was that users would abandon their keyboards and use a stylus for writing, an approach Palm would popularize years later. "It was going to be great; it was going to bring computers down to the rest of us," says Omidyar. "Of course, the market didn't think so."

A year and a half into their great experiment, Omidyar and his partners realized that pen-based computing was not about to take off anytime soon. As it happened, Ink Development had also put together some software tools for online commerce, and this marginal project now seemed to be the most promising part of the business. The company relaunched as eShop, an electronic retailing company. EShop was moving in the general direction of the Internet, but not fast enough for Omidyar. It was still stuck on the idea of conducting e-commerce on proprietary networks-close to, but still distinct from, the actual Internet. In 1994, Omidyar left eShop. He wanted a job that would let him "do Internet things," he says, as well as put him in more direct contact with people than he had been in his string of programming jobs. Omidyar retained a sizable equity stake in the company he helped found. Two years later, Microsoft bought out eShop, and the stock Omidyar received from the software giant made him a millionaire before he turned thirty.

Omidyar's next job gave him the greater exposure to the Internet that he had been seeking. He joined the developer-relations department at General Magic, a hot mobile-communications start-up. General Magic, which had been started in 1990 by a group of Apple veterans, was trying to take Apple in a post-Macintosh direction by building a new generation of small, communication-oriented Apple computers that would work with telephones and fax machines. In his new position, Omidyar also had contact with people: his job was to help third-party software developers-programmers outside the company — write software that worked with General Magic's Magic Cap platform. It was while Omidyar was at General Magic, working with both the Internet and with people, that he created AuctionWeb.

It started, legend has it, with PEZ.
In the summer of 1995, Pierre Omidyar was having dinner at home in Campbell with his fiancée, Pam Wesley. Wesley collected PEZ dispensers, and she mentioned that since they had moved from Boston to Silicon Valley, she was having trouble finding fellow collectors to trade with. It occurred to Omidyar that the still-fledgling Internet could provide the answer. He came to Wesley's rescue by writing the code for what would one day become eBay.

The PEZ dispenser story has been told and retold in countless popular accounts of eBay's history. But it is, Omidyar concedes, the "romantic" version of eBay's founding. The truth is, in the summer of 1995 Omidyar was doing what every other smart tech person within a hundred-mile radius of San Jose was doing: obsessing about the Internet and the uses to which it could be put.

Omidyar had not come west with Internet dreams. He had intended to program for the Macintosh, the computer platform he had fallen in love with in high school. But Silicon Valley in 1995 was, like Boston in 1775 or Sutter's Mill in 1849, a place caught up in an intoxicating shared vision of what the future would look like. The Internet was fast gaining critical mass. Dial-up service providers like AOL, CompuServe, and Prodigy were bringing millions of Americans online. Stanford engineering graduate students Jerry Yang and David Filo were attracting more than one million page views a day with a search engine they had named Yet Another Hierarchical Officious Oracle, abbreviated as Yahoo! If there had been any doubt about the commercial viability of the new medium, it was dispelled — for several years, anyway — when Netscape went public in August with a red-hot IPO that was widely regarded as the opening salvo of the Internet revolution.

Omidyar was ready to enlist. He was no stranger to cyberspace: he had been online for years, going back to his undergraduate days at Tufts. Back then, the Internet was a geeky backwater, the online equivalent of a high school audiovisual lab, where engineering students hung out in Usenet newsgroups trading jokes with punch lines like "3.14159," and Star Trek aficionados whiled away the early morning hours debating Klingon history. In college, Omidyar himself had been a regular in one of the geekiest newsgroups of all, a Usenet newsgroup for Macintosh programmers.

Copyright © 2002 by Adam Cohen

About the Author

Adam Cohen is a senior writer for the Nation section of Time, where he covers law and politics. He has also written for Chicago Magazine, Chicago Tribune and The Harvard Law Review. He lives in New York.