Pierre Omidyar was born in Paris, France to parents from Iran. He moved to Maryland with his family when his physician father began his residency at Johns Hopkins University Medical Center. Pierre became fascinated with computers while still in high school and graduated from Tufts University in 1988 with a degree in computer science.
After graduation, he worked for Claris, a subsidiary of Apple Computer, developing software for the Macintosh. In 1991, he co-founded Ink Development Corp. with three friends. The company included an Internet shopping segment and was later renamed eShop Inc. Omidyar worked as a software engineer for eShop until the end of 1994, when he became a developer services engineer for General Magic, a mobile communication platform company. In 1996, eShop was sold to Microsoft, but Omidyar remained fascinated by the technical challenges of online commerce.
While living and working in the San Francisco Bay Area, he met and married Pamela Wesley, a graduate student in biology who later embarked on a career as a management consultant. In a much repeated story, Omidyar originally created an online auction site to help his wife trade and collect Pez candy dispensers, but in his interview with the Academy of Achievement, Omidyar derides the story as “media-enhanced.” Other eBay spokesmen have since described it as a publicist’s fabrication. In fact, Omidyar was already intrigued by the technical problem of establishing an online venue for direct person-to-person auction of collectible items. He created a simple prototype on his personal web page, and launched an online service called Auction Web as a sole proprietorship on Labor Day weekend in 1995. The first item sold on the site was not a Pez dispenser, but a broken laser pointer. Omidyar was astonished that anyone would pay for the device in its broken state, but the buyer assured him he was deliberately collecting broken laser pointers. Similar surprises followed. The business exploded as correspondents began to register trade goods of an unimaginable variety.
Omidyar incorporated the enterprise; the small fee he collected on each sale financed the expansion of the site. The revenue soon outstripped his salary at General Magic, and Omidyar decided to dedicate his full attention to his new enterprise. Business expanded through word of mouth, and Auction Web added a Feedback Forum, allowing buyers and sellers to rate each other for honesty and reliability. From collectibles, the site quickly expanded into a vast range of saleable items, including furniture, electronics, home appliances, cars and other vehicles. In 1996, Omidyar signed a licensing deal to offer airline tickets online. In 1996, Auction Web hosted 250,000 auctions. In the first month of 1997, it hosted 2 million. By the middle of that year, eBay was hosting nearly 800,000 auctions a day.
Pierre Omidyar changed the company’s name to eBay in 1997 and began to advertise the service aggressively. He has served as chairman of the board since its incorporation. At first, he also served as chief financial officer, president and CEO, but he relinquished these positions one by one, the last when he hired former Hasbro executive Meg Whitman to serve as CEO in 1998. At the time, eBay had barely 30 employees, half a million users and U.S. revenues of $47 million. By the time eBay went public that fall, the site had more than a million registered users. The share price nearly tripled on the first day of trading and Omidyar’s holdings made him a billionaire overnight.
The rapid expansion of eBay’s traffic did not come without growing pains. In 1999 the company suffered a number of service interruptions, one lasting 22 hours, but Omidyar moved quickly to regain the confidence of the site’s customer base. The company made 10,000 phone calls to the site’s top users to apologize for the interruption and assure them that everything possible would be done to keep the site up and running in the future. As other online ventures fell victim to the dot.com bust of 2000, eBay continued to grow and prosper.
In 2002, eBay acquired the online payment processing firm PayPal, which it uses to process most of its online transactions, compelling many online sellers to employ the service. At the same time, eBay diversified its services, allowing sellers to engage in fixed-price and “best offer” sales as well as conventional auctions. Software developers can create applications to integrate into the site through the eBay Developers Program. In 2005, eBay opened a category for buying and selling surplus industrial machinery and business equipment. Many large companies now use eBay to set prices for their products and services.
Pierre Omidyar serves on the Board of Trustees of Tufts University, The Santa Fe Institute and The Omidyar Foundation. In November 2005, Pierre and Pamela Omidyar announced their gift of $100 million to endow the Omidyar-Tufts Microfinance Fund. At the time, it was the largest gift in the history of Tufts University, as well as the largest private allocation of capital to microfinance by any individual or family. The fund, administered by the Board of Trustees of Tufts University, invests in international microfinance initiatives designed to empower people in developing countries to lift themselves out of poverty. Ten years after going public, eBay had expanded around the world, employing more than 15,000 persons to serve a customer base numbering in the hundreds of millions, operating in 30 countries, with especially large presences in China and India.
Among other Omidyar family philanthropies, the Omidyar Network supports the creators of the emergency communication technology Ushahidi (Swahili for “testimony”), an application which allows users to create maps from data submitted by cell phone users. Originally created in the violent aftermath of the 2007 election in Kenya, it has since been used to track damage from the oil spill in the Gulf of Mexico and to locate trapped survivors of the 2010 earthquake in Haiti. Crowdmap, a free user-friendly web-based version of the application is now available online, thanks to the support of the Omidyar Network. In 2010, Pierre Omidyar joined Microsoft founder Bill Gates and investor Warren Buffett on the list of 40 billionaires pledging to donate at least half their wealth to charity. In fact, Pierre and Pamela Omidyar have resolved, during a period spanning 20 years, to give away all but one percent of their fortune.
Recently, Omidyar has devoted himself to media and free-speech causes, and in 2014 he founded the investigative news outfit The Intercept, in which journalists including Glenn Greenwald, Laura Poitras and Jeremy Scahill cover national security and surveillance issues brought to light by Edward Snowden. He’s also become involved with movie production, and his film Spotlight won the 2015 Best Picture Oscar for its portrayal of the Boston Globe’s investigation into sex abuse by Catholic priests.
In 2015, eBay had more than 265 million transactions during the holiday shopping season. Forbes magazine estimates Pierre Omidyar’s net worth at $8.1 billion. In 2016, eBay expects annual net revenues in the global marketplace of more than $8.5 billion.
Today, Pierre Omidyar is hailed as the architect of a new age of digital commerce, but the founder of eBay, the world’s largest personal online trading community, became a web entrepreneur almost by accident.
In 1995, he created the prototype for an online auction site as an experiment on his personal web page. Almost overnight, visitors by the thousands flocked to the site to trade collectibles and other goods, each of them paying Omidyar a small fee for the privilege. Today, eBay hosts millions of auctions a day, from sites based all over the world. Omidyar’s experiment became a publicly traded company and has made him a billionaire several times over.
Pierre Omidyar and his wife, Pamela, plan to give away all but one percent of their wealth within 20 years. They have already endowed Tufts University’s College of Citizenship and Public Service, an initiative designed to “create a community of graduates who can combine successful careers with active participation in public service organizations for social and environmental causes, and politics,” while other Omidyar Foundation initiatives are providing emergency communications technology to disaster areas throughout the world.
Was the origin of eBay as accidental as we’ve read?
Pierre Omidyar: The business success was, absolutely, but the birth of the idea is definitely a media-enhanced story.
You mean the Pez candy?
Pierre Omidyar: The Pez thing, right. Yeah. My wife — who was my fiancée at the time — whenever she hears about it she rolls her eyes. “Tell them I’m a management consultant. Tell them I have a master’s degree in molecular biology. I am not just this little Pez candy collector.” That was part of the inspiration, but frankly it was a small part of it for me. At the beginning, I didn’t get the human side of it that that story really embodies, which is the most important asset.
The most important thing of eBay is the human side now. At the beginning I didn’t get that. For me it was an experiment. It was like I said, I wanted to create an efficient market where individuals could benefit from participating in an efficient market, kind of level the playing field. And I thought, “Gee, the Internet, the web, it’s perfect for this.” This is more of an intellectual pursuit, you know, than anything else. It was just an idea that I had, and I started it as an experiment, as a side hobby basically, while I had my day job. And it just kind of grew. Within six months it was earning revenue that was paying my costs. Within nine months the revenue was more than I was making on my day job, and that’s kind of when the light bulb went off. “Knock, knock, knock. You’ve got a business here, do something about it.” So that’s when that really started.
You made an interesting distinction between the human side, as opposed to solving a technological problem.
Pierre Omidyar: Right. Absolutely.
If you think about it, commerce and trade is at the base of all human activity, and it’s a bit of an exaggeration, but I like to talk about, you know, in the old days people would bring their stuff to market and they’d do business and then they’d go back to their hillside homes or wherever. And eventually they were doing this enough that you had to build a wall around them to protect them, and that was the birth of cities and so forth. And again, gross generalizations and simplifications, but fundamentally everything we do in human activities is related to trade and there’s something, I think, that’s wired in human beings that drives us to commerce. I’m not sure what it is exactly, but the human side. So that’s the human side I’m referring to. With eBay it became apparent very quickly, because in order to do a trade — a transaction with someone — you actually have to get to know that person and build a trusting relationship first. So you have to build trust before you will enter into a transaction. And so in order to build trust you have to communicate. You have to get to know one another, and so very quickly I started getting letters about — actually some of the early letters were more negative. They were, you know, “This guy is a jerk,” kind of thing, and I said, “Okay, there’s some human element to that I wasn’t expecting. Please be nice. You know, not everyone is a jerk. Maybe there’s a misunderstanding. Give people the benefit of the doubt.” But you know, so very, very quickly I learned that it was actually the human element that was really driving it more than the commerce. So that was very interesting.
Could you ever have imagined how big eBay became and how fast?
Pierre Omidyar: Absolutely not.
For the first, I think, three years — at least the first two full years of our history — we grew at 20 to 30 percent every single month and I don’t think any other business has seen — I mean, every business in the start-up phase sees that kind of growth for a short period of time, but for such an extended period of time! And so as we were doing projections in terms of, okay, so this is what we’ve seen in the past, what can we project for growth next year, next quarter or whatever, so we can do budgeting and all that, we would only say, “Well, this can’t last, you know, this can’t last. There’s no way you can grow this fast.” So clearly there’s no way I anticipated it, and even as we were growing — even with smart people — and I finally hired business people to actually look at this thing, everyone was saying, “No, no, there’s no way it can continue to grow this fast.” But it has, which is remarkable.
Along the way, inevitably there are detours, there are disappointments, there are failures. If you have not suffered those, maybe the right question for you is not, “How do you deal with failure?” Maybe the right question is, “How do you deal with success?”
Pierre Omidyar: I’ll tackle both sides of that question. I knock on wood every time I think about it, because I think we were really blessed with a great community of people that embraced the idea and embraced the values. It’s all about treating each other the way you want to be treated yourself so that you can do business with one another. The business just grew on its own, and we just had to get out of the way and let it grow.
I know that the job of a typical entrepreneur is a lot harder than that, because I had done that before. I was a co-founder of another company before eBay. So we had it a lot easier than most. When we went to raise money, rather than trying to convince people to invest in eBay, we had to tell people to stop knocking on the door. We had our selection and we made a choice and found a strategic partner, and we took their money and we put it in the bank and we never touched it. It’s been mostly success, especially in the early days of eBay. The enormous growth and success brought a lot of challenges, too.
You can’t predict growth and success — no one in their right mind would predict 30 percent growth for another year every month — I mean, monthly growth for another year. So we were behind on a lot of things and a lot of the infrastructure, and we had some fairly public failures in the middle of ’99, and where our systems went down for 22 hours, and then went down for eight hours after that. And we had a very large community then. Not as large as today obviously, but still very large, front page news. We had CNN satellite trucks in the parking lot. I mean, it was big, big. “The world is watching, this company is gone. It’s going away.” And I think failure of that magnitude, or a challenge of that magnitude, is really important, and I’m glad that we faced it so early in our evolution, because Meg, who is the CEO — I brought on Meg in March of ’98 — she really woke up to the fact that infrastructure and technology was critical, and just really built that organization out over the next — it was a six- to nine-month process for us to kind of get over that. And so I think those challenges are also really critical and really important. And what you learn from them is, of course, kind of what they say, “If it doesn’t kill you, it makes you stronger,” and it’s true. And what you learn from those challenges and those failures are what will get you past the next ones.
Did you have any doubts? Did you have fears of failure?
Pierre Omidyar: I was the pretty consistent bull and the cheerleader on eBay actually. I just felt — once I realized the human connection that people were making with one another over the service — I just knew that there’s just nothing that can happen that can make it go away. And even after a massive outage like that, you really anger your community, they are depending on — a lot of them are dependent on us at that time for their livelihood and still do today — so it’s really a hardship. Even after that, they come back and they say, “Okay, well, we know you’re doing your best. We’re with you.” And so I’ve always had, you know — I’ve always had kind of this unshakable faith that it’s going to endure.
Is eBay the Silk Road of the 21st century? Is this how we are going to do business?
Pierre Omidyar: I hesitate to say that eBay or the Internet is the way all business is going to be done, all business is going to move to electronic commerce. Not at all. You still want to go to the mall, and you still want to socialize there. There’s a definite value and a reality to the real world experience.
What eBay did really was to create a new market, one that wasn’t really there before. And that was a global market for the kind of goods that were usually traded at flea markets and garage sales and this kind of thing, and that was the format. That was the start of it, and it hadn’t existed before, and now it has progressed past that into consumer electronics, computers. You know, a lot of people don’t know that, and I’ll put a plug in for my business here, but they don’t know that kind of every category that we’re in — in addition to collectibles — we’re the number one leader in terms of the dollars traded in that category on the Internet, except for books and music because there’s another company that’s pretty good at that. But I mean consumer electronics, computer equipment, sporting goods, everything, jewelry. It’s just unbelievable. So that base of — kind of the flea market base — has really evolved into a market for pretty much everything.