BY BRAD KELLY, INVESTORS.COM
In 1995, the Pew Research Center conducted a poll and found that only 8% of Americans felt comfortable using a credit card online.
This was a daunting statistic for a young entrepreneur looking to launch an online retail site.
But Pierre Omidyar, founder of the auction Web site eBay, (EBAY) was able to alleviate consumers' fears of shopping online by instilling trust in a virtual marketplace.
He transformed a little side experiment into an online powerhouse that today has 212 million registered users worldwide, a 40% increase from 2005, and sells and trades more than $40 billion worth of goods annually.
Omidyar has lived in different parts of the world, moving frequently as a child with his Iranian-French parents, but through it all he learned that everything begins with community.
Omidyar, 39, believes that people generally are good. He underscored that ideal with a bold proclamation to eBay's users soon after the firm's launch on Labor Day 1995:
"Some people are dishonest. Or deceptive. But (on eBay) those people can't hide. We'll drive them away. Protect each other from them."
Omidyar's fascination with becoming tech-savvy took root early. Born in France in 1967, he emigrated at age 6 with his parents to Washington, D.C., where his interest in computers bloomed.
He taught himself computer programming in the seventh grade, cutting gym class to use the science class's cheap computer, a Radio Shack TRS-80.
Taste Of Apple
As Omidyar got older, he programmed while using Apple computers. By the time he was a junior at Tufts University in the late 1980s, he realized that to fulfill his passion to become a Macintosh programmer he had to follow the Apple trail: to the West Coast.
Tech was taking off. Startups were popping up everywhere, and Omidyar wanted to jump on the ride. So he and some partners spun off an online commerce project and relaunched it as eShop.
But the venture was not moving toward the Internet fast enough for Omidyar.
In 1994, wanting more contact with people and the Internet, he left eShop, which was later bought by Microsoft. The stock Omidyar received from the buyout made him a millionaire at age 29.
While working at General Magic, his fourth job since landing in Silicon Valley, Omidyar started a side project. He called it a hobby, but it became much more: eBay.
According to legend, Omidyar created the site to help his fiancee and now wife, Pam Wesley, sell and trade Pez dispensers.
"This is the romantic version of eBay's founding," Omidyar said in Adam Cohen's book "The Perfect Store: Inside eBay."
The reality is that Omidyar was obsessing over the Internet and geeking out over its infinite possibilities.
He knew right away the potential of the Net when he put a broken laser pointer up for sale on his new site, AuctionWeb. He advertised the pointer as busted and asked for $1, and in two weeks bids boosted the price. He sold the pointer for $14.
The Web's auction concept was born. Then in 1997 he changed the name of his San Jose, Calif., firm to reflect the Echo Bay Technology Group: eBay.
Omidyar chose the auction format as eBay's business model for one reason. Following economic theory, an auction yields the perfect price because items are sold at an exact point where supply meets demand.
"Pierre realized that eBay wasn't the only place to shop, but by offering a different retailing experience people would log on," said Hani Durzy, who has been an eBay spokesman since 2001.
Less than a year after its start, eBay met lightning success. It was March 1996, and the firm's revenue hit $1,000 that month. In June, sales bulged to $10,000.
Omidyar decided it was time to quit his day job.
By the millennium, eBay was worth more than Yahoo and Amazon combined, according to Durzy.
EBay was different because it relied on the good nature of people. Omidyar's earliest challenge was trying to get total strangers to trust one another.
"The Internet was originally about people," Omidyar said in Cohen's book.
And the pony-tailed man wearing Birkenstocks kept his word. Omidyar would keep eBay about the people, for the people and regulated by the people.
He came up with the idea of a Feedback Forum, similar to a message board, that would be the tool that kept eBay trustworthy.
Registered users could give a buyer or seller a rating and could write a comment. The forum would allow positive and negative reviews about users to alert or pacify fears of people doing business on the site.
If a rating was so poor, eBay would "naru" someone, or make the person not a registered user.
This innovation helped keep eBay thriving as other Web sites fell victim to the dot-com collapse in 2000.
For years after the bubble burst, eBay, considered one of the most financially conservative companies in Silicon Valley, enjoyed stellar stock performance and was the envy of its e-commerce rivals.
When most companies were trying to avoid bankruptcy, eBay was expanding with its $1.5 billion acquisition of the online payment service PayPal in 2002.
Omidyar's greatest success behind his democratic vision was creating a level playing field by connecting people with people, instead of one centralized retail giant with thousands of consumers.
"Pierre's vision was made possible because he connected millions through shared interests," Durzy said.
Today, the site has spawned hundreds of thousands of entrepreneurs who make their living off eBay, as well as the creation of thousands of eBay franchises from which the company does not profit.
Omidyar, along with his wife, once again harvested the spirit of community to form his newest venture, Omidyar Network.
Its investment arm has funded more than 50 firms focused on helping people and their communities. He makes sure the network delves into one of his greatest passions: microfinance, or making loans as small as $40 to entrepreneurs in developing countries.
"Pierre always cuts to the heart of problems and thinks about things in the big picture and with a long horizon," said Iqbal Paroo, CEO of Omidyar Network.
Spread The Wealth
A billionaire before he was 40, Omidyar is spending this decade trying to give his wealth and ideals to the world, both real and virtual.
"He derives his inspiration from the human spirit that is ignited when individuals discover their power to make good things happen," Paroo said.
"EBay gives people a platform that enabled buyers and sellers to empower themselves. With Omidyar Network, he is scaling the concept of self-empowerment by creating the right enabling environments for people to address what matters to them."