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By the mid-1990s, however, a new Internet was emerging. Lowkey newsgroups were being pushed aside by something far glitzier- the World Wide Web, which suddenly gave anyone with a PC and a modem the power to call up documents stored on computers anywhere in the world. This new Internet, which was making the letters www a fixture of everyday conversation, had the power to connect everyone on earth — not through static postings left on a message board, but interactively and in real time. It was clear to anyone who was paying attention that this new Internet was about to change the world.

And all of Silicon Valley was paying attention. It seemed, that summer, as if people talked of nothing else. Programmers and entrepreneurs brainstormed about what the killer application was for this new technology, and plotted how to get in first with a business plan. Selling books or drugs or furniture. Delivering news or groceries or pet supplies. Mixing in celebrities or gambling or pornography. The millions — the billions — would pour in. Compared to the hot ideas bouncing around the Valley that summer, the application Omidyar was wrestling with had all the sex appeal of a college term paper.

In most times and places, creating a perfect market would have seemed like an arcane exercise. But in Silicon Valley in the midt 1990s, financial markets were as much a part of the culture as routers and microchips. New companies seemed to be going public daily, and freshly minted millionaires were everywhere. Omidyar kept hearing about company insiders, often friends and family of the founders, getting rich through stock purchases that were not available to average investors. This was standard practice for IPOs, but it struck him as unfair.

Omidyar had experienced the process firsthand. A few years earlier, he had been closely following a hot new video-game company called 3DO. Like many techies, Omidyar had been intrigued by its bold vision of creating a universal standard for the video-game industry. When 3DO announced plans to go public in May 1993, Omidyar placed an order for stock through his Charles Schwab brokerage account. What he had not counted on was that 3DO-whose high-flying CEO, Trip Hawkins, would later be named one of People magazine's "50 Most Beautiful People" — was about to become one of the most hyped IPOs of the tech boom. 3DO went public at $15 a share, but when Omidyar checked his account, he learned that the stock had soared 50 percent before his order had been filled. It all worked out in the end; Omidyar later sold his shares at a profit. But it struck him that this was not how a free market was supposed to operate — favored buyers paying one price, and ordinary people getting the same stock moments later at a sizeable markup.

Omidyar's solution was an online auction. He had never attended an auction himself, and did not know much about how auctions worked. He just thought of them as "interesting market mechanisms" that would naturally produce a fair and correct price for stocks, or for anything anyone wanted to sell. "Instead of posting a classified ad saying I have this object for sale, give me a hundred dollars, you post it and say here's a minimum price," he says. "If there's more than one person interested, let them fight it out." When the fighting was done, Omidyar says, "the seller would by definition get the market price for the item, whatever that might be on a particular day."

Since he was still working at General Magic, Omidyar had to do the programming for his perfect marketplace in his spare time. He was used to tinkering with Internet applications in his evenings and on weekends. He had already written a chess-by-mail program, which he was offering for free over the Internet. He had also completed the coding for a program he was calling WebMail Service, which allowed owners of small-screen computer devices like the Newton to get access to Internet pages through standard e-mail. More recently, he had created WebMail Watch Service, which monitored web pages users were interested in, and notified them when the pages had changed.

With Labor Day approaching, Omidyar made the program for a perfect marketplace his project for the long weekend. On Friday afternoon he holed up in his home office, a converted extra bedroom on the second floor of his modest town house, and began writing code. By Labor Day, he had created an auction website. The site was not much to look at. Its blocky blue-black text against a dingy gray background gave it all the graphic charm of a Usenet newsgroup. Omidyar had no real idea what people would want to sell, so he just created categories as they occurred to him — computer hardware and software, consumer electronics, antiques and collectibles, books and comics, automotive, and miscellaneous. The computer code Omidyar wrote let users do only three things: list items, view items, and place bids. The name he chose was as utilitarian as the site itself: AuctionWeb.

Since AuctionWeb was only a hobby, and he intended to offer its services for free, Omidyar tried to keep costs low. He wrote the program by patching together freeware he found on the Internet, and he ran the site from his home, off of a $30-a-month account he already had with Best, his Internet service provider. Rather than create a new website, he added AuctionWeb to one he was already operating. That spring, Omidyar had formed a sole proprietorship for his web consulting and freelance technology work, which he had named Echo Bay Technology Group. The name was not a reference to Echo Bay, Nevada, the wilderness area near Lake Mead, or to any other real-world Echo Bay. "It just sounded cool," he says. When he tried to register EchoBay.com, however, he found he was a few months too late. Echo Bay Mines, a Canadian company that mined for gold in Nevada, had gotten to it first, and was using echobay.com for its corporate home page. Omidyar registered what he considered to be the next best thing: eBay.com.

At the time AuctionWeb launched, Omidyar already had three other home pages running on eBay.com. One was for a small biotech start-up for which his fianc?e, Pam Wesley, a management consultant, had been working. Another belonged to the San Francisco Tufts Alliance, an alumni group of which Pam was president. The third was Omidyar's own: Ebola Information, his offbeat tribute to the Ebola virus. The site had a photograph of the virus that he had found on the Centers for Disease Control website, and it linked to news stories and data about Ebola and Ebola outbreaks. If users typed eBay.com/aw into their browser, they would be taken directly to AuctionWeb, which the home page called "eBay's AuctionWeb." But if they typed in only eBay.com, they would have to wade through three home pages, including Omidyar's homage to a loathsome disease.

On Labor Day, when AuctionWeb was up and running, Omidyar got to work trying to publicize it. He posted an announcement on a Usenet newsgroup that tracked new sites, and another on the National Center for Supercomputing Applications' "What's New" page, where it ran alongside Battery World, "a one-stop source for all battery needs," and CARveat Emptor, a site that provided consumer advice about automobile sales and services. "The most fun buying and selling on the Web," Omidyar wrote in the "What's New" listing. "Run an auction or join the fun of an existing auction." But both listings were delayed. The moderator of the new-site newsgroup had taken Labor Day off; the AuctionWeb listing did not appear on it until the following day. And because the "What's New" page had a heavy backlog, the announcement did not go up until October. That meant that on AuctionWeb's first day, there was no publicity at all. Of course, even if there had been, many of the site's potential users were spending the last holiday of the summer outdoors. Given these obstacles, Omidyar was not discouraged when, at the end of AuctionWeb's first day of operation, it occurred to him that it had not attracted a single visitor.

Copyright © 2002 by Adam Cohen

Tags: Career & Money, Biographies & Memoirs

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.