Omidyar, Pierre M.

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Omidyar, Pierre M.

(1967-)
eBay Inc.

Pierre Omidyar (pronounced oh–MID–ee–ar) created eBay Inc., the world's first and largest person–to–person online auction website, in 1995 as a way for his girlfriend Pamela to connect with fellow Pez candy dispenser collectors and traders. The company, which boasted the largest number of traders online and was the web's most popular shopping site, made Omidyar a billionaire in the process. eBay evolved from a black–and–white Internet start–up to a community of individuals and businesses forming the largest online marketplace in the world.

Personal Life

Pierre Omidyar married Pamela in a private ceremony at the Bellagio Hotel in Las Vegas in February 1999. He presented his new bride with an extremely rare Pez bride and groom set that he found on eBay, which was his favorite purchase from the auction site he founded. The couple lives in Las Vegas, Nevada. Omidyar enjoys racquetball, backgammon, and reading, and was awarded the Ernst & Young's Entrepreneur of the Year award in 1999.

Pierre and Pamela established The Omidyar Foundation, designed for a new style of philanthropy dubbed venture philanthropy. The foundation benefited a small number of causes that followed solid business plans and met certain criteria, including earning enough to sustain the nonprofit side of their work. The couple planned to eventually donate most of their $3.75 billion fortune to the foundation.

Omidyar was born June 21, 1967 in Paris, France. His parents were Iranian nationals who moved to Paris to attend school in their teens. When Pierre was six, the family moved from France to Maryland when his father began a residency there at Johns Hopkins University Medical Center. Omidyar, who had become a naturalized American citizen, discovered his passion for technology at an early age, sneaking out of gym class in high school to play on a computer. At age 14, the school library hired him, paying him $6 an hour to write a program to print catalogue cards. "I was the typical nerd or geek," Omidyar told Time. "I forget which one is the good one now."

In 1988 he received his bachelor's degree in computer science from Tufts University in Medford Massachusetts, where he met his wife. After graduating he landed a position as a software developer at Claris, a subsidiary of Apple Computer Inc., where he wrote the MacDraw application. His next move was to become an engineer for General Magic, Inc., an innovative Silicon Valley maker of interactive, online software.

Omidyar tasted entrepreneurial success in 1991 when he and three friends founded Ink Development Corp. Later renamed eShop Inc., the company was one of the early pioneers of online shopping. In 1996 the partners sold the venture to Microsoft Corp.

Career Details

During a casual dinner conversation with his girl-friend Pamela, Omidyar learned that she was having trouble finding and trading with other Pez collectors, and thought it would be a great idea to be able to do that online. Omidyar realized that collectors needed a central location to get together to trade and chat about their hobbies. He was still a General Magic employee when he launched Auction Web, an online person–to–person trading website, on Labor Day 1995. Omidyar later renamed the site eBay, short for "electronic Bay" in honor of his San Francisco Bay area home. The basic, black–and–white website was free to use. Omidyar, who viewed the early venture as simply a hobby, didn't even draw a salary at the time. Publicized largely through word of mouth, the business quickly caught on and in 1996 his Internet service provider, Best Internet, informed him that he needed to upgrade his $30–a–month system due to heavy traffic. Omidyar quit his day job that year to devote himself to eBay's burgeoning business full–time.

The site was easy to use: sellers and buyers came together to trade a wide variety of items from antiques to collectibles. Omidyar settled on the auction format as a way of creating an efficient market. He told Visions, "A great example was a man that was selling a daguerreotype [a photograph made by an early type of process] he had in his possession; I think he was asking about $450 for it. He wasn't aware of the true market value. The thing ended up selling for $9,000. If he had just offered it for sale at $500, he would have sold it at that price. The auction really created an official market for him in this case."

The auction process was fairly simple. After registering, sellers placed an item up for auction for a specific length of time, from three to 14 days. They could also set a minimum bid, or reserve price. Interested buyers confidentially input the maximum amount that they were willing to pay for the item. eBay automatically bid on their behalf, as well as that of competing buyers, until their maximum was reached. If a bidder was outbid and the auction's time had not lapsed, eBay allowed them to enter a new, higher maximum offer. At the conclusion of a successful transaction, the seller and buyer were given each other's e–mail addresses to arrange for payment and shipping of the item. Afterward, both buyer and seller were invited to provide feedback on the other. Omidyar implemented this feedback system as a way to build trust among participants and to weed out any dishonest or unreliable users.

In time, eBay's users suggested charging small fees for placing an item for sale to keep people from posting items with little value. Omidyar concurred and in February 1996 eBay began charging sellers a placement fee, starting at 25 cents, as well as a percentage of the item's closing price. The fee system also served to make the company profitable.

eBay was incorporated in May 1996. At the time its staff consisted of only Omidyar and Chris Agarpao, a part–time employee. Later that year Omidyar, who was still running the business out of his home, recruited Jeff Skoll to serve as vice president of strategic planning and analysis. It was Skoll who formulated the company's first business plan. Omidyar, meanwhile, focused on educating himself about the evolution of the website he created—who was buying what and what people wanted.

In 1996 the company moved its operations to Skoll's home and then to a temporary office in Sunnyvale before settling in San Jose, California. One year later, the volume of e–mail that the three employees were getting became unmanageable, so Omidyar hired approximately one dozen customer support personnel. In mid–1997 eBay held nearly 800,000 auctions a day. By late 1997 more than 3 million items had been sold, valuing $94 million, and generating $5.7 million in revenue for eBay.

Skoll and Omidyar realized that the company needed more direction than they could provide so they turned to the venture capital firm Benchmark Capital. After receiving a $5 million investment from Benchmark, they immediately began searching for a CEO that could provide eBay the leadership that it required. They set their sights on Meg Whitman, general manager of the pre–school division at Hasbro Inc. Whitman was skeptical about leaving the toy giant to join the small upstart, but after meeting with Omidyar and realizing eBay's potential, she accepted the position in 1998.

eBay went public in September 1998 with an initial offering price of $18 per share that climbed to $47.38 by the end of the first day of trading. With all its success, though, eBay was not without its problems. The ever–expanding list of registered users and items for auction left eBay scrambling to update its technology and outages were frequent. Omidyar handed the company's day–to–day responsibilities to Whitman in order to pursue outside interests, particularly philanthropy.

eBay constantly endeavored to improve its site. Its roster of merchandise categories and sub–categories expanded frequently. For example, the addition of eBay Motors, an automobile category, was a major success for the company. It added new features, like the popular "Buy it Now" option that enabled bidders to buy an item for a set price without waiting for the auction to end. It also added chat rooms and bulletin boards to help users connect with each other and talk about their hobbies, interests, or what they were looking to buy next. The company also expanded into new ventures, acquiring the auction house Butterfields and launching a fixed–price shopping site called Half.com.

According to Media Metrix's September 2000 results, people spent more time on eBay than on any other website. In 2001 eBay boasted more than 8,000 categories of items with 34 million registered users. It also had country–specific sites in Austria, Australia, Canada, France, Germany, Ireland, Italy, Japan, Korea, New Zealand, Switzerland, and the United Kingdom.

Chronology: Pierre M. Omidyar

1967: Born.

1988: Graduated from with a bachelor's degree in computer science.

1991: Founded Ink Development, later sold to Microsoft.

1995: Founded Auction Web, later renamed eBay.

1996: The company incorporated as eBay Inc.

1997: Three million items sold on eBay.

1998: eBay went public.

1998: Meg Whitman named president and CEO of eBay.

2001: eBay had 34 million registered users and 8,000 merchandise categories.

Ironically, Omidyar was originally drawn to the Internet for its anti–establishment values and noncommercialism. He was opposed to the idea of becoming yet another corporation pushing products that people didn't necessarily need. "I really wanted to give the individual the power to be a producer as well," he told Time. Omidyar also spoke to Time about the morals he learned growing up. "My mother always taught me to treat other people the way I want to be treated and to have respect for other people. Those are just good basic values to have in a crowded world." Omidyar incorporated these values into the company he founded, since the eBay experience is wholly dependent on how the users interact with each other. His motto: "Empowering people and helping them be the best they can be."

Social and Economic Impact

What began as a hobby for Pierre Omidyar, who was looking for an interesting way to please his girlfriend and to dabble in cyberspace, spawned one of the Internet's most successful companies, surviving in an environment where many failed in the dot–com downturn. eBay was the first person–to–person trading site and enabled millions of users to create a unique marketplace for themselves. The website evolved with the various needs of its community, adding more categories as new interests emerged and old ones became crowded, and empowering people in the process. The most popular shopping site on the web, eBay's growth prospects remained strong. Business 2.0 quoted the soft–spoken, modest Omidyar as he addressed a group of Pez collectors: "What eBay is today is what you've built. What eBay will be tomorrow is what you'll create."