Pierre Omidyar

Founder of eBay

• Born: June 21, 1967
• Place of Birth: Paris, France

Primary Company/Organization: eBay

Introduction

Throughout his career as a software engineer at Claris and a developer services engineer for General Magic, Pierre Omidyar's major interest was in online commerce and online auctions. With the establishment of the auction site eBay.com, he brought together buyers and sellers of huge numbers of different products and services. eBay is now the most widely recognized site where buyers and sellers meet, and Omidyar is widely recognized as one of the most innovative and creative Internet entrepreneurs. He and his wife are passionate philanthropists who have donated millions of dollars to social causes.

Early Life

Pierre Morad Omidyar was born on June 21, 1967, in Paris, France, to Iranian parents. Both of his parents went to school in France and have academic backgrounds. His mother graduated with a doctoral degree in linguistics from the Sorbonne in Paris, and his father pursued a medical degree. The family moved to the United States so Pierre's father could perform his residency at the Johns Hopkins University Medical Center in Baltimore. At the time, Omidyar was six years old. Even as a child, he was interested in computers. After completing high school, he enrolled at Tufts University, where he graduated with a computer science degree in 1988. Working as an intern at innovative data design during a summer break gave him his first experience in the computer industry. His first job was in software development at Claris, a subsidiary of Apple Computer.

Life's Work

In 1991, while still working full time at Claris, Omidyar cofounded a company called Ink Development Corporation with three of his friends. The company developed software for pen-based computers and also a program to enable Internet shopping. Omidyar was a software engineer for this company, which later focused on e-retailing and was duly renamed eShop, Inc. When later, in 1996, eShop was sold to Microsoft, Omidyar, who still owned shares in the company, became a millionaire.

In 1994, Omidyar left eShop and joined General Magic as a developer services engineer. In September 1995, working in his home in San Jose, Omidyar created the code for AuctionWeb, an online service to enable person-to-person auctions and provide a marketplace for individual buyers and sellers. The first product he sold was a broken laser pointer: He was surprised by the sale and, after questioning the buyer about why he would want to buy damaged goods, was told that the buyer collected broken laser pointers. The epiphany that followed—that a market existed for practically anything, given the ability to link the right seller with the right buyer—led Omidyar to recognize the untapped potential of his service. The business grew quickly, but the increasing number of users visiting his sites led Omidyar's Internet service provider to increase his fees. In order to be able to pay for his Internet access, he started to charge a relatively small fee to his clients based on the final price of the product sold. From the first month, his business became profitable: Soon AuctionWeb dominated Omidyar's entire domain, www.ebay.com. (The name eBay came from an abbreviation for Echo Bay, the name of Omidyar's consulting company.)

Recognizing the importance of a good customer experience to the success of the site and realizing that he alone could no longer deal with all the incoming questions from users of the site, in February 1996 Omidyar added a feedback forum through which buyers and sellers could evaluate one another. He also added a bulletin board to enable and encourage all eBay users to discuss their issues, problems, and questions openly. Now users could help themselves and one another. The business grew quickly. In March 1996, Omidyar's revenues totaled $1,000, in April $2,500, in May $5,000, and in June $10,000.

Concomitant with these growing revenues, however, Omidyar faced another problem. All payments were being sent directly to his house, and he was now unable to cope with the huge volume of mail. He hired his first part-time employee, Chris Agarpao, to open his mail and deposit all the money in a bank. This significantly relieved Omidyar from having to respond to a barrage of inquiries and allowed him to focus on business operations and expanding the site to allow the sale and purchase not only of the small collectibles with which he had started but also larger items, such as furniture, electronics, and cars. Ultimately, he quit his day job at General Magic to focus his energy solely on the development of AuctionWeb.

In August 1996, Omidyar hired Jeffrey Skoll, a graduate of Stanford University with a master's in business administration, as the company's first official employee and first president. In November, the company was licensed to offer airline tickets online. In the same year, 250,000 auctions were hosted; by January 1997, that number had grown to 2 million. By mid-1997, the site was hosting as many as 800,000 auctions per day. In September, Omidyar officially renamed the company eBay; he would remain eBay's chairman as well as developing other ventures.

In order to market and expand the company, in March 1998 eBay recruited Meg Whitman, a Harvard Business School graduate with a deep record of experience in corporate branding strategies, as chief executive officer (CEO). Whitman strengthened the company by hiring senior staff with technical experience who were well versed in the establishment of a strong corporate brand. They helped her communicate that eBay was not only about buying and selling things but also about connecting people. eBay now started to expand business to include more expensive products and services. The products had a higher average sale price (ASP), which determined eBay's transaction fee. By facilitating the sale of more expensive items, eBay, in return, could increase revenues. This prompted eBay to enter into partnerships with numerous brands, including GM, Disney, and Sun, which started to sell their products on eBay's online marketplace. On September 21, 1998, eBay went public and made both Omidyar and Skoll billionaires.

In 1999, eBay's site was down for twenty-two hours: the company had to apologize to its customers for this significant interruption in service—a mark of how big it had become. The business continued to grow: In 2002, eBay acquired two companies, iBazar, an auction website in Europe, and PayPal, an online payment-processing service. In 2005, another acquisition was made, Skype, for $2.5 billion plus $500 million later paid out to Skype's founders. This decision, led by Whitman in an effort to develop the online community aspect of the site, received harsh criticism, and the expected usage by eBay users did not materialize. By early 2008, however, eBay's revenues had increased to almost $7.7 billion. In January 2008, Whitman stepped down as president and CEO and was succeeded by John Donahoe.

In 2009, eBay announced that it had sold 65 percent of its share in Skype for $1.9 billion. In May 2011, after Skype was bought by Microsoft for $8.5 billion, eBay, still holding 35 percent in Skype, made a profit, defying those who had previously criticized the purchase of Skype. In the same year, eBay purchased GSI, a company specializing in e-commerce marketing.

By the end of 2011, eBay was connecting more than 100 million people around the world. Through PayPal, eBay's online payment service, buyers and sellers could buy and sell in 190 markets and twenty-four currencies. PayPal soon drove the growth of eBay significantly. In the first three months of 2011, eBay's net income totaled $476 million, which was 20 percent higher than that of the previous year. In 2011, eBay sold goods estimated at $68.6 billion, more than $2,100 every second. In the first quarter of 2012, eBay's revenues increased by 29 percent to $3.3 billion and the company's profits rose from $476 million to $570 million.

While Omidyar remained on the board of directors at eBay, he also developed other enterprises, including the Omidyar Network, a philanthropic investment firm, in 2004; Peers News in 2008; an online investigative news service in Hawaii, Honolulu Civil Beat, in 2010; and First Look Media in 2013. First Look Media is an umbrella organization over Topic Studios, the news site The Intercept, the documentary filmmaking division Field of Vision, and the Press Freedom Defense Fund, among other independent news and entertainment initiatives. In 2023 Forbes estimated Omidyar's net worth at $8.8 billion.

Personal Life

Omidyar met his future wife, Pamela Wesley, a biologist turned management consultant, while he was working in the San Francisco Bay Area. Connecting people is not only his business motto but also a matter close to the couple's heart. The two are recognized as important philanthropists, having been engaged in bringing individuals and whole communities together, supporting personal growth and encouraging empowerment for social change. The Omidyars signed the Giving Pledge, a voluntary commitment to donate at least half of their wealth, in 2010. The Omidyar Network helps people to better themselves and supports innovative nonprofit organizations. It has invested more than $822 million in the promotion of positive social change.

Omidyar is active in Tufts University's alumni organization, having, with Pam, been one of the cochairs of the Beyond Boundaries Campaign. In 2005, the Omidyars made a donation of $100 million to Tufts, enabling the creation of the Omidyar-Tufts Microfinance Fund, designed to support people in developing countries. On May 22, 2011, Tufts awarded Omidyar an honorary doctorate of public service for his contribution to the business world and his social engagement.

Bibliography

Cohen, Adam. The Perfect Store. New York: Little, Brown, 2002. Print.

Houser, Daniel, and John Wooders. “Reputation in Auctions: Theory and Evidence from eBay.” Journal of Economics and Management Strategy 15.2 (2006): 353–69. Print.

Omidyar, Pierre, and Issie Lapowsky. "How Pierre Omidyar Turned an Idealist Notion into Billions of Dollars." Inc. Dec. 2013–Jan. 2014: n. pag. Web. 28 Sept. 2015.

"Pierre Omidyar." Forbes, 2023, www.forbes.com/profile/pierre-omidyar/?sh=c4cd5be66da8. Accessed 7 Mar. 2024.

Prince, Dennis L. How to Sell Anything on eBay … and Make a Fortune. New York: McGraw-Hill, 2004. Print.

"The Richest People in Tech." Forbes. Forbes.com, 2015. Web. 28 Sept. 2015.