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.
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 p*rnography, 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.
Where did you grow up, and what you were like as a kid?
Pierre Omidyar: I was born in Paris, Paris, France. I lived there until I was six years old actually, and I went to bilingual school as I was growing up during that period so I learned English. And at age six moved to the United States, moved to the east coast of the U.S., Washington, D.C. area, and grew up in the D.C. area actually through high school. I had a brief stint actually in Hawaii in junior high school, eighth and ninth grades. Then back to the Washington, D.C. area, college in Boston and then after college moved to California. That’s kind of a resume of where I’ve been.
The longest I was in one place was in college, four years. Before that it was the last three years of high school. Before that we were moving every two to three years. I wasn’t part of a military family, which is usually the cause of that. It just kind of happened.
How did that affect you? All that moving around when you were growing up?
Pierre Omidyar: I didn’t really realize until we moved after ninth grade — which was my last year in Hawaii — that I had missed people. In eighth and ninth grade, I had finally started to make some close friends in school, and leaving after ninth grade was kind of tough. It was tough for me personally. Before that it was just what I knew. It was the way I was raised and it was fine. There weren’t a lot of kids around, and when I was younger I ended up hanging out with adults a lot more, because I had to. In retrospect I may have been cheated a little bit on the childhood side. I kind of grew up very quickly and became a little more mature more quickly than I see some of my relatives these days.
How would you describe yourself as a kid?
Pierre Omidyar: I was actually interested in gadgets, little electronic gadgets. Whether it was calculators — actually I remember early on going out shopping for a calculator — and this was when calculators were like $100, you know, I mean — and with my dad, I think. And so I was always fascinated by these little gadgets and I always managed to break them for one reason or another, of course, as kids do, and then I would take them apart and try to fix them, which I was never able to.
Do you recall early influences in your life? Who was important to you?
Pierre Omidyar: I think it’s both my mom and my dad. They were separated when I was two, I think, but my dad was always part of my life. I lived with my mom, but my dad was always around. I remember when I was younger spending weekends with my dad, who is a surgeon and a medical doctor, doing rounds with him. We would spend maybe 45 minutes in the car going from one hospital to the next and we’d have some great conversations. That’s one of my fond childhood memories.
What did you talk about?
Pierre Omidyar: My dad still does have a fascinating kind of grasp of all things, and we’d talk about history and art. When I say conversation, that’s not quite accurate. It was mostly one way. Now that I’m older — I’m 33 now — I think if I was in his shoes I’d think, “This kid isn’t hearing anything I’m saying,” from my reaction. It’s funny now that I look back on it, it was a precious time for me.
Were you a good student?
Pierre Omidyar: I was one of these guys that didn’t really study, so I don’t think I was a good student. I am very proud to say that I graduated from Tufts University with better than a 3.0 average. It was actually 3.01. During my entire four years there at Tufts my GPA improved every single semester, which gives you an idea of where I started. No, I was not a good student.
Were there any subjects you were particularly interested in? Any books that influenced or were important to you?
Pierre Omidyar: I’ve been asked before, “Who are your heroes?” and these types of questions. I always find it hard to identify a single person or a single book or this sort of thing. I’ve always been forward looking. I was raised with the notion that you can do pretty much anything you want. You’re able to accomplish anything you set out to accomplish. I was given a sense of confidence and I never really felt the need to — or I’ve never had the benefit, I should probably say — of being inspired by outside heroes.
From early on you were interested in gadgets, including computers. How did this first manifest itself?
Pierre Omidyar: I’ve always been into the gadgets and I guess when I first saw a computer — I’m trying to think if it was third — it might have been third grade. It was pretty early on actually and it was an early TRS-80, you know, Radio Shack. Kind of the original Radio Shack TRS-80 computer, 4K of memory. I think this one had the 4K or the 8K expansion module, which was like as big as a desk, you know, and learned how to program Basic on it. And I used to actually cut gym and sneak into the computer room — which wasn’t really a room, it was a closet where they kept the computer between classes — and played on the computer.
Did you pass gym?
Pierre Omidyar: Good question. I don’t know if I failed gym or not. I don’t think I failed.
It sounds like even then you were kind of entrepreneurial.
Pierre Omidyar: I always kind of just went ahead and tried things and one of the things I learned later — you know, more kind of professionally — is that a lot of people don’t just go ahead and try things. They’ll have an idea and they’ll say — they’ll convince themselves or other people will convince them that it can’t be done. You know, one or the other. Actually I think that the first is even more dangerous and more serious. It’s convincing yourself that it can’t be done. And I never learned that for some reason, so I just kind of had this naive approach to — well, gee, you know, why not. I’ll just go ahead and do it.
We’ve read that early in high school you wrote a program to print catalogue cards at six bucks an hour. Was that your start?
Pierre Omidyar: That was my professional debut. Six bucks an hour. And it’s funny too, thinking about it, because it was using computer technology to print out library cards for the card catalogue. And so all it was, was a program to just format. You know, somebody would type in the information and it would format it the way the librarian wanted, so they could put the cards into the card catalogue. So this is incredibly basic computer technology. This is no database there. No search engine, nothing like that. But yeah, six dollars an hour. And also, at that time I also worked on the software to help schedule classes, which was key. This was in high school at tenth or 11th grade, I think, when I was working on that, and I resisted the temptation to put in some code in there to make sure I never had classes on Friday, because I wouldn’t have been able to get away with it, but I thought about it.
Was there ever any doubt in your mind that computer science was what you wanted to do?
Pierre Omidyar: I always wanted to be involved with computers. My original kind of career choice, what I thought I was going to do was more computer engineering, which was, I thought — you know, figure out the hardware and the software and combine the two to learn about computers. When I got to college at Tufts I was accepted into the engineering school to do an electrical engineering and computer engineering program. I learned quickly there in my first semester — actually my second — well, I learned very quickly that the engineering program was a little bit too rigorous for me. I took a class. I took a chemistry class, and I think that was second semester of freshman year, because it was required for the engineering program, taking chemistry. I had no interest in chemistry. And I had worked — I worked so hard for that class trying to understand what was going on and study for the test and everything, and did so poorly. I remember for the mid-term I had studied harder than I had for anything else and got 25 out of 100 on the test. And it was at that point I said, “You know what, this is kind of ridiculous.” So I transferred out of the engineering college and went to liberal arts and just did the pure computer science.
What else do you recall from college in terms of influences and life-changing experiences or ideas?
Pierre Omidyar: When I was in college I taught myself how to program the Macintosh. A big foundation actually for that was a class. It was actually — so it wasn’t completely self-taught — it was a C programming class called “Data Structures.” It was the big kind of the “weed-out” class for the computer science program. I learned how to program C. A great, great professor. Probably one of the best I’ve ever had, and a couple of things stem from that story. The first is that that professor eventually had to leave the school. He was a great teacher but apparently he had never published anything, and so they axed him. He had to leave and that was a scandal, at least in my mind. So I don’t know what exactly that taught me, but it did have an impact on me and — yeah. And then second, you know, I learned how to program C, and then I used that ability to teach myself how to program the Macintosh which I was just very excited about learning everything I could about it. And of course, that’s how I began actually my professional career was after college — actually a year before graduating from college — I took a summer job in California working at a software company for the Macintosh.
Did it enter your mind at that point in your life what was going to happen?
Pierre Omidyar: No, no, no, not at all. I was just pursuing what I enjoyed doing. I mean, I was pursuing my passion. And the whole — you know, the ability to create software that could have a benefit or an impact on people that used it was what was driving me. And so I was driven by, you know, mass market software and the whole notion of just being able to do neat things. And like most software people, it is very much a passion more than anything else. And so, like people have said, it is not really work, you know, if you are having fun, it’s not work so that was the case with me.
What do you think motivates you to do what you do?
Pierre Omidyar: I’ve got a passion for solving a problem that I think I can solve in a new way. And that maybe it helps that nobody has done it before as well. I mean, we always have — you know, there’s a sense of pride of doing something brand new, and I’m particularly inspired by problems that seem easily solvable. Not the difficult problems that some of the physicists that are here, for example, are talking about, but problems that seem easily solvable, that no one has bothered to attack because they think it’s impossible, you know. And so with eBay, the whole idea there was just to help people do business with one another on the Internet. And people thought it was impossible because how could people on the Internet — remember this is 1995 — how could they trust each other? How could they get to know each other? And I thought that was silly. You know, it was a silly concern because people are basically good, honest people. So that was very motivating. It was, “Gee, I’ll just do it. I’ll just show them. Let’s see what happens.”
What do you say to a young man or woman who comes to you for advice and says, “I want to do what you did”?
Pierre Omidyar: Well, if they say, “I want to do exactly what you did and compete with eBay,” I say, “Don’t bother. Don’t quit your day job.” That’s pretty rare. I love actually coming to these kinds of venues where I talk to students and young people because they are very passionate and they have great ideas. And, what I tell them is a number of things.
I say that you should pursue your passion. If you’re passionate about something and you work hard, then I think you’ll be successful. If you start a business because you think you’re going to make a lot of money at it, then you probably won’t be successful, because that’s the wrong reason to start a business. You have to really believe in what you’re doing, be passionate enough about it so that you will put in the hours and the hard work that it takes to actually succeed there, and then you’ll be successful.
When you look at the accomplishments of accomplished people and you say, “Boy, that must have been really hard,” you know, when you look at something that looks hard, that was probably easy. And conversely, when you look at something that looks easy, that was probably hard. And so you’re never going to know which is which until you actually go and do it. So just go and do it, try it, learn from it. You’ll fail at some things, that’s a learning experience that you need so that you can take that on to the next experience. And don’t let people who you may respect and who you believe know what they’re talking about, don’t let them tell you it can’t be done, because often they will tell you it can’t be done, and it’s just because they don’t have the courage to try.
One of your former colleagues at Microsoft said that it surprised him that you made this fortune. Why would he say something like that?
Pierre Omidyar: It’s funny. I laugh because after the article came out he sent me an e-mail and he said, “I’m really sorry. That’s not what I said. It wasn’t supposed to come out that way,” and he felt really bad about it. I didn’t actually think it was that big a deal. I guess he thought it was a bit insulting or something.
Can nice guys make it in the business world?
Pierre Omidyar: That’s a very kind way of phrasing that question, and I appreciate that. I think nice guys can make it. Especially in my business, eBay, which is all based on people doing business with one another. What I tell people all the time about eBay is that it’s not like a retail experience.
If you think about a retail environment, where people are buying things in a retail environment, the retailer has a whole bunch of control. They choose the products. They design the store or the catalogue. They train the salespeople. They control the experience. And if there’s a problem with a salesperson, they retrain and so on and so forth. At eBay, our customer’s experience is based on how one customer interacts with another customer, okay, and you can’t control customer behavior. So the only thing you can do is have a certain set of values that you encourage people to adopt, and the only way your customers are going to adopt those values is if they see that you’re living those values as well. So when I say that I believe people are basically good, it’s because I believe people are basically good. I mean, it’s not something that I came up with for eBay. And if I say that you should treat people with the benefit of the doubt, it’s because I believe in that as a way of life. And we have to do it internally at eBay at the company as well, because if we don’t, then eventually that seeps through, and customers will see that and that will harm our business, because we can’t control customer behavior. So our business is based on that.
That’s a long-winded way of saying that “nice guys,” a responsible company that has its heart in the right place — that’s run by real human beings — it has to be successful, because if we weren’t that way, eBay would not be successful, eBay wouldn’t exist. It would not be possible.
Do you have some idea of what you’d like to do next? Where do you go from here?
Pierre Omidyar: The big opportunity that I see now is shepherding this wealth that has been created into our philanthropic goals. Those goals have to do with rekindling a sense of the community, reminding people that it’s important to be part of your community and there’s a benefit that comes with being part of your community. That’s something that in America we have lost a little bit, but the value is still there. The core values of community are still there in America, and they just need to be rekindled a little bit.
What are the responsibilities that go along with the kind of success you’ve had and the kind of wealth you’ve been able to accumulate?
Pierre Omidyar: I look at it as a deep and heavy responsibility, in fact, to make sure that that wealth goes to good use, because it’s very simple. An enormous amount of wealth has been created in this business, even in my business, and it is unmeasurable. My personal wealth is far beyond what any normal human being will ever need in their lifetime for themselves, for their family, for their descendants for generations. You know, a small, small piece of what I have is enough for that. And so the rest of it, I don’t want to see it go to waste. So I have a responsibility to make sure it’s put to good use. And you know, I feel I’m benefiting from the market success of a great business that has been built by regular, ordinary people who are logging on every day and doing business with one another. And you know, that’s something that I have to give back. I have to do it. I have to make sure that that wealth is put to good use. It’s a learning process for my wife and I as we think about that. We have 50 years ahead of us hopefully, at least as philanthropists, so we’ve got a long-term horizon.
All of the money and the jobs and the opportunities that have been created by this revolution, what are some of the dangers? What are some of the pitfalls that have gone along with this dot.com revolution?
Pierre Omidyar: There are a number of issues. Definitely the Internet is changing everything, and has changed the world in such a short period of time, and will continue to change things in very positive ways that we have yet to anticipate. At the same time, if you look at it in just this last few years of time, the market has gotten away from itself a little bit. A lot of businesses were created that should never have been created, that should never have been funded, that should never have been brought to the public markets, and it created an impression that it was really easy to make a lot of money with a stupid idea.
So a lot more people said, “Gee, great. It’s working for that guy so I should come in and do the same thing.” Just a few years ago, MBA graduates were going into consulting jobs and the like, now they’re all starting their own companies. Some of that is a good thing. I want people to try it. I want people to be entrepreneurs, but I want them to do it for the right reasons, because they think they can change the world, because they think they have got something of value to give to the world. Not because they think they can make a lot of money. That is the wrong way to do anything. There has been a bit of a negative effect on Silicon Valley, in particular. We left Silicon Valley. We don’t live there anymore partly for that reason.
It has created a bit of a negative effect with consumers as well, in that it has created unrealistic expectations in some cases. The expectation that a valuable service should be provided free of charge, and in some cases that a valuable service should be provided only if the service provider pays you as a customer, so it’s worse than free. So it’s some crazy things like that. It’s going to take some time to unwind and recover from that.
What do you think about the impact of the Internet boom on the communities in which these companies operate?
Pierre Omidyar: Yeah. You know, in Silicon Valley it is — I think there has been a big problem in the last few years. Public servants like police officers and firemen, teachers and so forth cannot live in the communities that they serve. They can’t afford to own a home, much less even rent a home in those communities. They drive two hours to get to work every day. And when you have your community beat cop police officer, you know, not being a part of your community, that’s bad. That really hurts. Not to mention other — you know, other service workers and, you know, other lower wage earners that have just had to leave. That’s a problem. That’s a serious problem.
Looking ahead into the 21st century, what do you see happening in your field?
Pierre Omidyar: I’m very excited by the prospect of what we haven’t seen yet. The web was invented in ’93. People graduating from college this year entered college with the web. In just a matter of years people graduating from college will have entered high school with the web, and it will have existed as part of their being.
I’m too old for that. I grew up in the software world. I grew up in a technology environment but it was all about building software packages that can solve people’s problems and change the world. Now kids are growing up and going into the work force with the background of growing up with the web, with a global communication medium that is interactive, that people can congregate around. I think it is exciting to see what kinds of ideas they will come up with, things the world has never seen before. That is what I’m waiting for.
What are your hopes for this world, as you look ahead, beyond what you do?
Pierre Omidyar: Beyond technology? It very much dovetails with what we are trying to do with our philanthropy. If we can help people reconnect with their communities, I think we can work together as a global community and solve the world’s problems. You know, it’s a bit idealistic, but we’re really looking for second order effects in what we’re doing. In other words, if we can just get people to just reconnect with their community. Just realize that you’re an individual, but you have a responsibility to be part of your community, and that responsibility is not just a burden, but it also comes with benefits that are real tangible benefits that you’ll see, being a part of that community. Then just think, if everyone thought like that, you could actually tackle local community problems, homelessness, health care. I mean, just serious problems, and you could tackle global problems as well, because we now have — again we have a global communications medium, and communities are being built, not just in the real world but in the virtual world as well. So I’m very hopeful that the reconnection with community that I — actually, frankly, I first became passionate about it because of eBay — because I saw it happen on eBay, I am very hopeful that that reconnection is going to dramatically improve the world.
If eBay had not happened, what would you be doing? What would have become of you?
Pierre Omidyar: I wouldn’t be having as much fun. That’s for sure.
Thank you so much for taking the time to talk with us today.
Of course. Thank you.
