Read Online How They Started by David Lester - Free Book Online Page B
Authors: David Lester
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classified ad saying I have this object for sale, give me $100, you post it and say, ‘Here’s a minimum price,’” he once said, recalling his early strategy in an interview. “If there’s more than one person interested, let them fight it out.”
The bigger picture
It was going to take time and patience to develop his business idea, but Pierre relished such a challenge and worked around the clock, holding down his day job during the week and working on AuctionWeb in his spare time in the evenings and on weekends. In fact, he wrote the initial code for eBay in one weekend. It was a labor of love and an all-consuming hobby. With his concept for an online auction, Pierre wanted, above all, to promote the idea of a community on the Web, one that was built on fairness and trust.
“I’ve got a passion for solving a problem that I think I can solve in a new way.”
Once the code was complete, Pierre launched the site; however, he had no idea what types of things people might want to buy and sell. As an experiment, he advertised his broken laser pointer for sale, and to his surprise, he found a buyer who was interested in broken ones. Pierre created a handful of categories—including computer hardware and software, antiques, and books and comics—in which users were soon listing, viewing and bidding on items.
Because he intended to offer the service for free, it was imperative that he keep overhead as low as possible. To this end, Pierre ran the site from home, paying $30 a month to his Internet service provider (ISP). He also decided to register the business and picked the name Echo Bay Technology, which he thought “sounded cool.” But when he tried to register it, he found that it was already registered to a Canadian mining company, so instead he shortened the moniker to eBay.
To boost traffic, Pierre eschewed advertising and PR and deals with other sites in favor of generating awareness by word of mouth. He posted announcements about the site in online newsgroups to attract attention, and this had the desired effect: computer geeks and bargain hunters emailed one another with details of the site. Despite the lack of paid advertising, eBay soon gathered momentum, and healthy numbers of visitors began listing and buying all manner of goods. Toward the end of 1995, Pierre’s ISP began to charge him $250 a month, suspecting that the growing volume of traffic was putting a strain on its system. This marked a turning point for Pierre and signaled the moment when he decided to turn what was until now just a hobby into a full-fledged business.
Pierre wanted, above all, to promote the idea of a community on the Web, one that was built on fairness and trust.
eBay’s headquarters in San Jose, California.
“That’s when I said, ‘You know, this is kind of a fun hobby, but $250 a month is a lot of money,’” he has since recalled. Pierre had designed the site to be able to collect a small fee based on each sale. Implementing this charge now would provide him with the necessary money to fund overheads and expand the business. He decided to charge 5 percent of the sale price for items below $25 and 2.5 percent for items above this threshold. Later he would add a charge for listing items.
Going for growth
With the new fee structure, the fees collected began to surpass his salary at the time, which made it an easy decision to quit his job and devote his full attention and time to eBay. In June 1996, with the site recording more than $10,000 in revenues for that month and 41,000 registered users, Pierre hired his first employee, Jeff Skoll, who had previously been involved in two high-tech startups. Pierre also set up feedback capabilities on the site to enhance the buying and selling process and reinforce his original mission of creating a trusted community. A year later, eBay was attracting more consumers than any other online site.
“By building a simple system, with just a few guiding principles, eBay was open
The bigger picture
It was going to take time and patience to develop his business idea, but Pierre relished such a challenge and worked around the clock, holding down his day job during the week and working on AuctionWeb in his spare time in the evenings and on weekends. In fact, he wrote the initial code for eBay in one weekend. It was a labor of love and an all-consuming hobby. With his concept for an online auction, Pierre wanted, above all, to promote the idea of a community on the Web, one that was built on fairness and trust.
“I’ve got a passion for solving a problem that I think I can solve in a new way.”
Once the code was complete, Pierre launched the site; however, he had no idea what types of things people might want to buy and sell. As an experiment, he advertised his broken laser pointer for sale, and to his surprise, he found a buyer who was interested in broken ones. Pierre created a handful of categories—including computer hardware and software, antiques, and books and comics—in which users were soon listing, viewing and bidding on items.
Because he intended to offer the service for free, it was imperative that he keep overhead as low as possible. To this end, Pierre ran the site from home, paying $30 a month to his Internet service provider (ISP). He also decided to register the business and picked the name Echo Bay Technology, which he thought “sounded cool.” But when he tried to register it, he found that it was already registered to a Canadian mining company, so instead he shortened the moniker to eBay.
To boost traffic, Pierre eschewed advertising and PR and deals with other sites in favor of generating awareness by word of mouth. He posted announcements about the site in online newsgroups to attract attention, and this had the desired effect: computer geeks and bargain hunters emailed one another with details of the site. Despite the lack of paid advertising, eBay soon gathered momentum, and healthy numbers of visitors began listing and buying all manner of goods. Toward the end of 1995, Pierre’s ISP began to charge him $250 a month, suspecting that the growing volume of traffic was putting a strain on its system. This marked a turning point for Pierre and signaled the moment when he decided to turn what was until now just a hobby into a full-fledged business.
Pierre wanted, above all, to promote the idea of a community on the Web, one that was built on fairness and trust.
eBay’s headquarters in San Jose, California.
“That’s when I said, ‘You know, this is kind of a fun hobby, but $250 a month is a lot of money,’” he has since recalled. Pierre had designed the site to be able to collect a small fee based on each sale. Implementing this charge now would provide him with the necessary money to fund overheads and expand the business. He decided to charge 5 percent of the sale price for items below $25 and 2.5 percent for items above this threshold. Later he would add a charge for listing items.
Going for growth
With the new fee structure, the fees collected began to surpass his salary at the time, which made it an easy decision to quit his job and devote his full attention and time to eBay. In June 1996, with the site recording more than $10,000 in revenues for that month and 41,000 registered users, Pierre hired his first employee, Jeff Skoll, who had previously been involved in two high-tech startups. Pierre also set up feedback capabilities on the site to enhance the buying and selling process and reinforce his original mission of creating a trusted community. A year later, eBay was attracting more consumers than any other online site.
“By building a simple system, with just a few guiding principles, eBay was open
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