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In February 1996, Omidyar announced his proposal for how to do just that: the Feedback Forum. "Most people are honest," he wrote in a Founder's Letter posted on the site. However, some people are dishonest. Or deceptive. This is true here, in the newsgroups, in the classifieds, and right next door. It's a fact of life. But here, those people can't hide. We'll drive them away. Protect others from them. This grand hope depends on your active participation. Become a registered user. Use our Feedback Forum. Give praise where it is due; make complaints where appropriate. . . . Deal with others the way you would have them deal with you.

Remember that you are usually dealing with individuals, just like yourself. Subject to making mistakes. Well-meaning, but wrong on occasion. That's just human.

Through the Feedback Forum, the complaints that landed in Omidyar's e-mail in box would be brought out into the open. The entire community would know about them and have an opportunity to deal with them appropriately. Omidyar made clear from the outset that he wanted positive comments as well as negative ones, both to encourage people to say favorable things about one another, and because positive comments could be just as revealing as negative ones. "I was afraid it might just turn into a gripe forum," he says. "But as I watched it develop over the weeks, I was amazed to realize that people actually enjoy giving praise, too."

The rules of the Feedback Forum were straightforward. Users were allowed to give each other a rating of plus one, minus one, or neutral, and to include a written explanation if they wished. EBay's software then tabulated each user's score and put the total in parentheses after his or her name. The Feedback Forum played the same role on AuctionWeb that reputation plays in a small town. Through the numbers that appeared after users' names, the AuctionWeb community's opinion of them would follow them wherever they went. The new system did not entirely remove Omidyar from the role of enforcer. He decided that when users' Feedback Forum ratings got too low-negative four or less-they would be banned from the site. Omidyar arrived at the cutoff point of negative four without much deliberation-it just struck him as the point at which his assumption of goodness was sufficiently rebutted-and he did not reveal it to users. But even years later it would remain the number that caused eBay to "NARU" someone-to make him or her Not a Registered User.

Around the same time, Omidyar added another feature to the site: a message board called, simply, the Bulletin Board. Like the Feedback Forum, the Bulletin Board was designed to limit his role and place more of AuctionWeb's administration in the hands of the community. Omidyar did not have time to explain to each individual user how to write a listing in HTML, or to give advice on bidding strategy. The Bulletin Board was in the tradition of the Usenet newsgroups Omidyar had long used, a place for people to gather, share information, and ask for help.

As soon as the Bulletin Board went up, the questions poured in. What was the best way to ship? What should a seller do when a high bidder disappeared? The answers came just as quickly. "If someone came on and said, 'Please help me,' there were twenty-five people who would rush to help," recalls Steven Phillips, a retired naval petty officer from Dallas who sold chintz and pottery in the early days. A core group of regulars emerged who functioned as a de facto customer-service department. The site even had-in those innocent, spamless days — a directory of e-mail addresses, making it easy for users to communicate with message board regulars. Phillips alone got 100 to 150 e-mails a day from his fellow AuctionWeb users, and he answered all of them.

With every day that passed, more cash- and check-filled envelopes arrived at Omidyar's town house. In March, revenues hit $1,000, once again more than the site's expenses. In April, revenues rose to $2,500, and in May AuctionWeb took in $5,000. The envelopes were piling up so fast that Omidyar literally did not have time to open them. He used some of the funds to make his first part-time hire. Chris Agarpao, the brother-in-law of a close friend, started coming to Omidyar's home twice a week to open the envelopes and deposit the money. In June, when revenues doubled for the fourth consecutive month, topping $10,000, Omidyar decided it had become a real business. "I had a hobby that was making me more money than my day job," he says. "So I decided it was time to quit my day job."

Omidyar thought when he left General Magic he would be able to reclaim his nights and weekends. But he found that all of his waking hours were now being taken up by AuctionWeb — keeping it running, writing code for new features, and answering user e-mail.

Having worked in start-ups, Omidyar knew that if AuctionWeb was going to keep growing, he would need a strategy that went beyond bringing in Agarpao to open envelopes and deposit checks. "I had a vague idea of what I needed to do as an entrepreneur," Omidyar says. "But I knew I wasn't going to be able to put together a business plan." He started looking for someone who could.

Omidyar thought immediately of Jeff Skoll, a Stanford MBA he had met through friends two years earlier. Skoll, a slightly built, hyperkinetic Jewish Canadian, was a born entrepreneur. His father sold industrial chemicals, and by age twelve Skoll himself was going door-to- door selling Amway products in Montreal. Skoll's youth coincided with a rising tide of separatism in Quebec, and he experienced the depth of French-Canadian nationalist sentiment firsthand when he was making the rounds selling electronic keyboards. He was often asked to demonstrate them, but the only song he could play was "O Canada," the national anthem. It went over well among the English-speakers, but not in French-speaking areas. One woman, on hearing Skoll's musical performance, sicced her dog on him. Not much later, Skoll's family joined the growing English-speaking exodus from the province and settled in Toronto, where he attended high school.

Skoll graduated from the University of Toronto in 1987 with an electrical engineering degree and a 4.0 GPA. He then founded two high-tech companies: Skoll Engineering, a consulting firm that helped corporate and government clients set up inventory management and accounting systems, and Micros on the Move Ltd., a computer rental company. Skoll's ambitions, however, extended beyond the comfortable life he was starting to carve out in Toronto. Six years after graduating from college, he headed to Palo Alto, California, to enroll in the Stanford Graduate School of Business. Skoll finished up his degree in 1995, at the same time Omidyar was wrestling with the idea for AuctionWeb, and found himself just as drawn to the Internet as his future partner. Skoll took his freshly minted MBA to Knight-Ridder Information, Inc., a unit of the large newspaper chain, which hired him to help direct its Internet strategy.

Skoll struck Omidyar as an "analytic powerhouse" whose skills would complement his own. But the attraction, at least initially, was not mutual. The previous Thanksgiving, when AuctionWeb was just a few months old, Omidyar had tried to interest Skoll in joining the company, but it had not gone well. "I told Jeff there were people buying and selling on the Internet who never see each other but actually send money and stuff back and forth," recalls Omidyar. "He said, 'That's ridiculous.' " Skoll had just come back from the first meeting of CommerceNet, a nonprofit symposium promoting commerce on the Internet. At the symposium, the moderator had asked the crowd of three hundred how many of them had bought or sold anything online, and only three people raised their hands. It seemed to Skoll that if e-commerce had made so few inroads in that tech-savvy audience, AuctionWeb was fighting a losing battle.

Copyright © 2002 by Adam Cohen

Tags: Career & Money

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.