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If you like Pierre Omidyar's story, you might also like:
Timothy Berners-Lee,
Jeffrey Bezos,
Stephen Case,
Michael Dell,
Lawrence Ellison,
Bill Gates,
John Hennessy,
Reid Hoffman,
Craig McCaw
and Larry Page

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Pierre Omidyar
Pierre Omidyar
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Pierre Omidyar Interview (page: 3 / 8)

Founder and Chairman, eBay

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  Pierre Omidyar

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.

That raises another question you've had to deal with, and that is your responsibility for what is sold on eBay. It may be true that 95 percent of the people or more can be trusted. What about the other small percentage?

Pierre Omidyar: I founded the company on the notion that people were basically good, and that if you give them the benefit of the doubt you're rarely disappointed. And I'm thankful that, in fact, statistics have borne that out to be true. And it is actually 99.999 percent of our transactions happen without a case of reported fraud. There are 30 cases out of every one million transactions where somebody actually goes to the trouble to report fraud, so presumably there's some unreported level as well that's higher than that and people don't bother. But that is -- there's no word to describe it. It's far more than a large majority or most, or whatever. I mean, it's practically all transactions happen without a problem. Now, as the absolute number of transactions have gone up -- this is another challenge that we faced -- is that the absolute number of problems has also gone up, and so with the attention that is paid on the company -- I mean, you can open the newspaper on any given day and read about the latest problem that's related to eBay somehow. Whether it's some kind of strange new item being offered on the site, or an illegal item or whatever. And so we've had to evolve our strategies and our policies from what I built in the beginning, which was a self-policing community of people, to one where we take a more active role in trying to help identify the bad actors. We work with the authorities to go find them and make sure they don't come back and this sort of thing.

[ Key to Success ] Integrity

But nothing yet has shaken your faith in human nature?

Pierre Omidyar: No. This is the first time we have statistical proof. It's a wide open marketplace, and yet only 30 out of one million transactions! And it's amazing, that ratio has stayed true since we first started measuring it in January of '98. It was like 27 that month. So even as the number of transactions has exploded, that ratio is still true.

What about the other issue that has come up, in terms of the goods and collectibles that are transacted on eBay? Whether it's AK47s or pornography, what is your responsibility for that and what do you do about it?

Pierre Omidyar: The founding standards again, were that it was a self-policing community and the community would decide for itself what was appropriate and what was not appropriate. And I created a system of the feedback forum, which I'm very proud of because it has been copied gazillions of times and it was my idea. It allows people to kind of rate each other and give feedback on how their transaction went. And if they don't like something that somebody is doing, and enough people don't like it, that person is automatically kicked off of the system.

That worked very well in the early days. As we grew, and the community became more diverse, we found that there are certain categories of goods that the majority of the community just didn't want to see. Even though it's protected, or even though it's legal. First of all, illegal goods were never allowed on eBay. Never. Legal but questionable goods we've had to be more active on, and you mentioned AK47s.

Firearms, for example, we decided a while back, I think in '98, pretty early on to -- actually I'm not sure about the date frankly, but we decided to remove those from the site, to say, "You know what, eBay is no longer an appropriate venue to trade firearms." And the reason is that the regulations in all the states are so different and so varied that it was hard. It was very easy for a member to accidentally trip over a regulation, and we didn't want them to get into trouble, and at the same time, frankly, Meg's point of view was if somebody buys a gun on eBay and uses that to harm somebody, we don't actually want that. So in her mind she was uncomfortable with it, actually from the day she joined the company, so we got rid of that.

Adult items is another interesting issue.

We actually surveyed our members once, a while back in a broad survey about a number of things, but it turned out that we asked whether or not this category -- this adult category should be removed, because there is an adult category on eBay that is segregated from the rest. And 70 percent of them said, "No, keep it." This was a general broad survey, you know. So we think community standards have to be respected, and as long as we segregate this category away from minors -- not only minors, because minors aren't supposed to use the site anyway -- but we prevent a minor from even viewing the items, then I think we're doing a good job there and addressing that concern.

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This page last revised on Oct 20, 2010 00:15 EDT
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