A Look at the E-Wizards Behind the
Hottest Web Auction Site -- Who Put
The e In eBay?
CMP Media Inc. - Saturday, December 04, 1999
Dec. 03, 1999 (VARBusiness - CMP via COMTEX) -- Collectors of Beanie Babies
and Pez dispensers sure put a lot of green into eBay Inc. But that's nothing
compared with what Andersen Consulting, USWeb/CKS, Sun Microsystems Inc.,
Oracle Corp., Compaq Computer Corp., Exodus Communications Inc. and a
brigade of other vendors and service providers have done for the online auction
company: They help put the "e" in eBay.
Putting the "e" in there has turned out to be the ultimate reference account, which
companies have used as an entree into other e-business opportunities. But now
competition to help eBay is heating up like a Harley-Davidson Redhead Barbie
auction before closing. With much at stake, IBM Corp., Compaq and others are all
doing a little more bidding at eBay-as well as at other promising dot com ventures.
Who'll end up with the ultimate bragging rights to whom is not yet known. But one
thing's already certain: The effort to put the "e" in various e-businesses is taking
competition to a new level. Here's why.
Understanding who is putting the "e" in many businesses requires some homework
and even a bit of faith. That's because successful e-business ventures seem to have
many fathers. That's certainly the case with eBay. As it has grown from a URL with
a handful of articles to a mega-Web site with 60,000 items to a destination
community that today boasts 3.5 million items up for grabs, the company has
engaged a variety of partners. Swing a mouse around any Internet trade event and
you're bound to strike someone who claims to have put at least some of the "e" in
eBay. Take Scient Corp., for example.
The San Francisco-based Web integration company, which has been profiled on the
cover of this magazine for its groundbreaking work with PlanetRx, Gateway, Chase
Manhattan, Realtor.com and others, lists eBay among its clients, despite its own
acknowledgment that it did only a week or so of work for the company. It never wrote
code or installed equipment, but it benefited from its association just the same.
Organizations that eBay thinks have no business associating themselves with the
online auction giant are asked to stop using the eBay name, says Michael Wilson,
eBay's chief scientist. Those who have done real work for the company, even if only
briefly, find it amusing how far some will go to position themselves as a partner of
eBay.
"Some seem to think that buying a Furby from the company's Web site entitles
them to claim that they did business with eBay," laughs Brad Bishop, owner and
president of Avcom Technologies Inc., a Silicon Valley-based equipment and service
provider. Avcom sold eBay an estimated $3 million worth of Sun hardware and
related software and services when eBay got started. Bishop recalls the trepidation
he felt extending the then unproven start-up some credit to help pay for its systems.
Though only a fraction of its overall sales, the account could have been a showcase
piece of business for Avcom, if only Bishop's eBay account manager hadn't jumped
ship to rival CAT Technology. When he did, he took the eBay business, and
accompanying bragging rights, with him.
Though eBay built much of its own auction and transaction processing systems, it
has relied significantly on help from the product and service communities. Hardware
and software vendors enlisted by eBay include Sun, Compaq, Cisco Systems Inc.,
Microsoft, Oracle and Veritas Software Corp. More than merely providing products,
those companies have offered invaluable assistance to eBay in a variety of forms.
Mark Jarvis, senior vice president of worldwide marketing at Oracle, says his
company not only helped eBay manage one of the more important databases on the
Web, but it also helped the company find some much-needed IT talent.
Shaping eBay's Infrastructure
eBay, which Wilson says is actually a conservative user of technology, today relies on two different
computing platforms: one from Compaq, the other from Sun. The Compaq systems that run Microsoft
Windows NT are used for handling front-line requests for information on items listed for sale on eBay's
auction pages. Critical information stored in eBay's Oracle transaction database runs on Sun Starfire
equipment. Veritas software helps shoulder the company's storage management needs, while Cisco
networking equipment directs traffic around the eBay site, which hosts 2.5 million auctions each day.
Where feasible, eBay will build innovations it needs. But often the decision to build or acquire
technology comes down to resources. With more than 5 million registered users pushing the eBay system
to its limits, the company's IT department is always under strain.
One of eBay's better build-or-buy decisions, Wilson says, was its choice of a search engine. It went with
Thunderstone Software of Cleveland rather than build its own. eBay uses Thunderstone's Texis suite of
relational search engine technologies, which Thunderstone says are unique in their ability to search and
sort information. eBay started using Thunderstone's engine long before eBay was a household name.
That's because Texis is the only search engine that can handle the hundreds of thousands of indexes
eBay does each day, says Doran Howitt, vice president of marketing at Thunderstone.
When it came time to make its auction site as visually appealing as possible, eBay turned to outside
design and branding specialists, including Razorfish Inc. and USWeb/CKS. Neither list eBay as a
reference account any longer. But both can point to the work they did there. USWeb/CKS' branding and
marketing team, for example, helped design the colorful eBay logo.
In addition to these intermediaries, several other companies continue to play significant roles in
building eBay's information infrastructure. Andersen Consulting, for example, helped eBay shape its
internal IT department. It still provides counsel when needed, says Wilson. SystemExperts Corp.
provided invaluable security expertise, he adds, when hackers made an attempt on eBay's systems last
spring. Wilson says turning to the Sudbury, Mass., consulting company was another of his better
decisions. Bound by confidentiality agreements, SystemExperts president Jon Gossels will only say that
eBay has made "remarkable progress" in improving its security systems in a short time.
As for CAT Technology, a San Jose-based Sun VAR and Cisco partner that took the eBay account from
Avcom, it supplies hardware and basic services to eBay to this day. Among other things, the company
helps coordinate the installation of Web servers with eBay's two Web hosting companies, Exodus and
AboveNet Communications. eBay has used Exodus since its earliest days and only recently signed an
agreement with AboveNet. It was brought in to provide "diversity" and backup to Exodus, according to
Wilson. AboveNet stores eBay servers in "lights-out" rooms that are managed remotely by eBay
technicians at the company's headquarters, he adds.
Though proud that Wilson's company was chosen to help one of the highest-profile e-businesses on the
planet, AboveNet is not sharing many details about its arrangement with its new client. The company
did not put out a press release to trumpet its good fortune, but instead relied on eBay to discuss the
selection of an additional hosting company on its own terms.
"Being chosen by eBay says a lot about AboveNet," says David Rand, senior vice president, chief
technologist and co-founder of AboveNet, San Jose. "Exactly what you're going to have to get from
eBay."
Like many companies, AboveNet believes it is in an excellent position to compete for more of eBay's
fast-growing IT needs. But like others, it can see over its shoulder a phalanx of hopefuls that are vying for
a piece of eBay's business. More than a few think they'll be the next to put the "e" in eBay. And they are
wasting no time trying to make the most of what they consider to be a stroke of good luck, at least as far
as they are concerned.
Working Out the Bugs
eBay's site went down in June and continues to stumble on occasion. In June, the problem was widely
reported to be a bug in Sun software. The reports were accurate, but eBay doesn't blame Sun, which
warned eBay ahead of time about the need to upgrade its software. Instead, eBay blames its own
internal controls for the outages.
Although the June disruption in service was eBay's longest (22 hours) and most costly (several billion
dollars in lost equity and several million dollars in unexpected charges), the recent outages have raised
many concerns, at least to outsiders who believed the company had a handle on its fast-growing
operations. The snafus demonstrate that eBay does not yet have control over its infrastructure to the
extent the company desires.
For its part, eBay has moved quickly to bring in seasoned IT management and establish a much-needed
backup plan that was lacking. In mid-August, eBay named an outsider, former Gateway Inc. vice
president and CIO Maynard Webb, to the newly created position of president of eBay Technologies. His
job: oversee all aspects of the company's site, including its architecture, technology and engineering.
Among other things, he and Wilson will consider plans from a variety of companies eager to put a little
"e" of their own into eBay.
Many offers of assistance, of course, arrive unsolicited to the company. They're generally routed to an
administrator, who may or may not have time to respond in a timely fashion. But others have been
sought out by eBay, says Wilson, who adds that the company finds it useful to "evaluate new
technologies and strategies on an ongoing basis."
Among those who are vying for more of eBay's business is Compaq, which already supplies more than
200 Compaq systems to eBay. Compaq is trying to persuade eBay to buy into its Non-Stop e-Business
initiative, which revolves around Compaq's high-availability technology acquired from Tandem
Computers. The Compaq servers eBay uses serve as the front-line systems in eBay's massive technology
portfolio. But they don't do the heavy lifting that other systems from Sun do. Compaq and IBM want the
business that Sun currently enjoys. IBM, for one, says it won't replace the Sun systems used by eBay, but
instead manage them better than they are managed today.
"At some point," says an IBM insider, "you have to step up and go with the most proven and capable
provider possible."
Sun agrees with the sentiment, but bitterly resents IBM's assertion that it is better qualified to help eBay.
In fact, Sun says IBM's assessment that it could better serve eBay is not only laughable from a customer
point of view, but also from the perspective of the entire partner community. It reveals just how much of
a professional services company IBM wants to be, says Joe Womack, vice president of Sun's domestic
channel sales initiatives. "This whole approach clearly illustrates the differences in our basic partnering
philosophies. IBM wants to compete with providers for service business while we prefer to work
hand-in-hand with partners to serve our customers."
IBM counters that there is plenty of work to go around for it and its partners in eBay, and elsewhere
where pitched battles for high-profile e-business accounts are being waged on a daily basis.
Putting the 'e' In Other E-businesses
With all the competition for certain accounts, it's no wonder that more Web integration specialists are
seeking their clients' blessings to call themselves the definitive provider of record. That is especially true
of service providers that have roots in the advertising community, where being "an agency of record" has
a longstanding tradition. Just last week, for example, iXL Inc. announced that Home Depot had named
it as its "primary e-business partner" for Internet initiatives. That followed a similar announcement in
which iXL said it was named as the Internet services firm of record by Discover Financial Services, Inc.,
which owns the www.discovercard.com site.
Other Web integration specialists are less interested in being named an "account of record" as long as
they can point to the individual projects they have completed. Lucinda Duncalfe, CEO of
Conshohocken, Pa.-based Destiny WebSolutions Inc., says she generally doesn't pursue such
endorsements because they are more often associated with design-oriented shops. "If someone wants
credit for making a site blue, then they can have it," she says. "Destiny prefers the recognition that comes
with building and architecting successful e-business sites for high-profile financial institutions."
Because it has so much invested in branding and design work, USWeb/CKS is keen on demonstrating
those talents. But it recognizes the need to promote its other capabilities and thus selects to publicize
examples of work that showcase all of its talents. Several marquee projects are featured on its Web site.
One, Williams-Sonoma, is profiled on its home page.
More than most, USWeb/CKS has been extremely aggressive in promoting its wins in press releases and
other marketing efforts. That includes work done for Walgreens, Levi Strauss and, most recently, toy
retailer FAO Schwartz. Doing so has enabled the company to take credit for successful projects. But, on
occasion, the strategy has backfired. Last year, for example, USWeb made a big deal out of the work it
did to help Barnes and Noble get its dot com site up to speed. But when the site later proved to be less
than industrial strength, USWeb distanced itself, saying the client had taken over.
To ensure there is no confusion over the work it does, Agency.com not only lists the names of the clients
it works with on its site, but also the exact projects that it has done for each one. For Prudential, for
example, Agency.com says it had a hand in the financial giant's United Kingdom Web site, prototypes of
specific intranet and extranet projects and the customer's Insurance Retirement Services CD-ROM. What
the customer list lacks in breadth, it more than makes up for in specificity.
Still, confusion over who put what "e" in which e-business reigns throughout the Web.
Conflicts of Record
Demystifying who helped whom with their e-business projects is not easy. That is especially true in
multibillion-dollar conglomerates. In many of these organizations, individual departments and divisions
have moved rapidly to establish e-business and e-commerce ventures where possible. Rarely do business
units in a hurry to complete a competitive Web project consult with other areas of their global empires.
Even when they do, they often wind up with more than one solution and/or provider to create a new
e-business venture. Furthermore, the number of partners required to complete an e-business project
increases with the complexity of a particular application. Today's sophisticated e-business ventures can
require dozens of prime and sub contractors. One of the reasons eBay became so self sufficient was
because full-service Web integration shops did not exist when it launched its business. Had they been
around, eBay scientist Wilson says the company might have availed itself of even more third parties than
it did. (See interview, page 65.)
From a provider standpoint, the above reality often means sharing the limelight with other companies.
Take USWeb/CKS and Web integration rival C-Bridge Internet Solutions of Cambridge, Mass. Both have
completed high-profile projects for Harley-Davidson Inc. And both aggressively promote the work they
have done for the Milwaukee motorcycle legend.
USWeb/CKS built a warranty solution that was featured prominently on this magazine's cover a year
ago. The extranet solution helped automate warranty claims submitted to Harley-Davidson by its
dealers, greatly streamlining an antiquated manual process. Instead of three weeks, orders could be
processed in three days, according to USWeb. C-Bridge also developed a solution for
Buell/Harley-Davidson dealers. Its application allows customers to purchase accessories, schedule
service, pose questions and schedule test rides online with dealers, according to C-Bridge.
Crowded as that account may be, Chase Manhattan is even more bustling. Web integrators iXL, Scient,
Destiny and Nuforia, an Atlanta Web integrator, have all played a role in the financial giant's Web
efforts. iXL, for example, developed a suite of solutions for Chase Merchant Services, which gives Chase
customers access to merchant-related services and information 24 hours a day. Using CRM technology,
the site can leverage and cross-sell banking services.
Scient, meanwhile, helped Chase with several applications, while Destiny consultants worked with Chase
in 1999 on Internet credit card initiatives. "It doesn't bother us that that iXL, Scient and others are
dealing with Chase. There's plenty to do," says Destiny's Duncalfe. Besides, she adds, her company is
focused on applications rather than branding and other activities that are not the highest value-add third
parties can provide.
Finally, Nuforia helped develop Chase's online Web recruiting site, known as Find Your Place@Chase.
If only one of these companies could develop a simple way to determine who did what in e-commerce.
That would be something.
eBay At a Glance
Headquarters: San Jose, Calif.
www.ebay.com
Founded: 1995
Key Executives: Pierre Omidyar, founder and chairman; Meg Whitman, president and CEO; Gary
Bengier, CFO; Brian Swette, senior vice president of marketing; Scott Barnum, vice president
international; Michael Wilson, chief scientist; Jeff Skoll, vice president of strategic planning and
analysis; Steve Westly, vice president of marketing and business development
Key Facts: More than 5 million registered users; items available in 1, 600 categories; more than 2.5
million auctions hosted each day; more than 250,000 new items join the "for sale" list every 24 hours;
more than 1.5 billion page views per month; more than 50 million auctions have been completed on
eBay since its inception.
E-Biz Facilitators
eBay relies on many contributors, such as the following:
- AboveNet Communications Inc.
Provider of Internet connectivity and co-location solutions for high-bandwidth applications is eBay's
backup host provider.
- Andersen Consulting
Global business solutions implementor helped eBay establish and organize its own IT department.
- CAT Technology
Sun VAR and authorized Java center supplies Sun servers to eBay and its host companies.
- Cisco Systems Inc.
Leading hardware provider is eBay's preferred internetworking supplier.
- Compaq Computer Corp.
Hardware giant supplies more than 200 Windows NT servers to eBay.
- Exodus Communications Inc.
Internet systems and network management solutions provider hosts eBay's most complex systems.
- Oracle Corp.
Provides strategic transaction database to eBay.
- Sun Microsystems Inc.
Provides industrial-strength hardware systems and platforms.
- SystemExperts Corp.
Security consultant helped eBay after hack attack earlier this year.
- Thunderstone Software
Web developer convinced eBay to use Thunderstone's search and sort engine rather than develop one.
- USWeb/CKS
Web integrator helped market and brand eBay, and design its logo.
- Veritas Software Corp.
ISV provides critical storage management solutions to eBay.
Sidebar: Interview -- eBay Chief Scientist Keeps Track of the e's
eBay executives list their most treasured collectibles on the eBay Web
site.
Ask eBay chief scientist Michael Wilson about the most prized collectible he purchased from the auction
Web site, and he'll tell you it's his Looney Tunes Yosemite Sam Pez dispenser. His approach to
partnerships is no less creative.
VARBusiness: So many people want to associate themselves with your success. Does the number amuse
you?
Wilson: We take a firm stand against people mentioning our name where it's not warranted. We call
them pretty quickly if we see something amiss...It's happened a couple of times.
VB: Both vendors and service companies have provided help, no?
Wilson: Sure. We received branding help from CKS, for example. As far as strategy, there weren't any
real e-commerce strategy people out there to help like there are today. We give credit to many
companies-Oracle, Cisco and Thunderstone, for example. But as far as strategy, we had to do a lot
ourselves.
VB: CEO Meg Whitman has said that you aim to have as much as five times capacity. Where are you
now?
Wilson: I have not seen those comments, but I can tell you where we are. I just looked at the numbers
yesterday. We're running at 40 percent, which means we can handle twice the capacity. Remember, the
trouble we had was never due to load, but instead to low-level software and hardware issues. Our
challenge is to preserve what made us successful. It's important to remember how quickly we went from
60,000 items to 3.5 million items.
VB: Are you an aggressive adopter of new technology?
Wilson: We use tried-and-true technology, Unix and Windows. Given our growth rate and size, and that
our customer base is so diverse, we have to take a cautious approach when new technology appears.
Typically, it just won't scale.
VB: Do you run the risk of not moving as fast as certain rivals?
Wilson: Do you know Ansel Adams, the photographer? He stuck with black and white for most of his
career because it provided an unrivaled experience. We constantly embrace innovation. But our
technology has to scale to meet diverse user needs.
VB: Is there an extra burden associated with two different platforms?
Wilson: Well, there are two sides to that. There's complexity but, with a multivendor approach, there's
competition, too-which is healthy.
Sidebar: Scient Puts More Than a Pretty Face On Sephora.com -- Web integrator builds complete
solution for cosmetics retailer
Scient Corp. is among the many that can claim to have put the "e" in eBay, at least a small one
anyway.
For Sephora.com, the San Francisco-based integrator did much more. In fact, Scient put nearly all of
the "e" in Sephora, helping the cosmetics retailer plan, design and implement its new e-business site,
which sells cosmetics and fragrances, among other items.
"This really was a soup-to-nuts engagement," explains Christine Gardner, vice president and general
manager of e-markets at Scient. She says Scient counseled Sephora on its underlying business strategy
and helped build an online brand. Scient designed basic customer user experiences, for example, and
built the entire architecture for the project. That meant integrating a fulfillment system and selecting a
hosting provider for Sephora.
Scient also counseled Sephora on ways to integrate the new e-business venture with its ongoing
brick-and-mortar business. "For this client, we've had to think of ways to extend a brand, not just create
one as we've helped PlanetRx and others do. This presents a different set of challenges," says Gardner.
"Ultimately, we'd like to create 360-degree relationships for the customer and integrate kiosks in its
stores."
Construction of Sephora's site, which debuted in October, took less than six months. Last month, the
company added new features to the 2-month-old site, including a new Web magazine designed to bond
customers to the site.
While not as high-profile as eBay, Sephora has marquee value nonetheless. Sephora is owned by Moet
Hennessy Louis Vuitton, the French purveyor of luxury goods. Its chairman, Bernard Arnault, was recently
chosen by BusinessWeek as one of the 25 most influential people in e-business.
Not bad company to keep, concedes Gardner.
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