eBay Attracts Devoted Following
Sharon Doney sits at her computer surrounded by items she's selling on eBay to raise money for a liver transplant. (Susan Biddle — The Washington Post)
By Mark Leibovich
Washington Post Staff Writer
Sunday, January 31, 1999; Page A1
Sharon Doney was contemplating a yard sale last summer. But she took a friend's advice instead and sold her goods through eBay, the online auction house where random buyers find random sellers for random stuff.
Bids flew in. In her first day, Doney sold eight well-worn books from her library and made $46. To her surprise, she also made friends. Four months later, when the math tutor was slowed by an autoimmune disease, eBay became a source of economic and social sustenance. She grossed $2,000 in December selling miscellaneous items she had around her home in Severn, Md., and customers e-mailed prayers for her health. Some donated auctionable goods to help with her medical bills.
At its most elemental, eBay is an electronic flea market spiced by the gamesmanship of auctions, a freewheeling exchange for Furbys, Pee-Wee Herman hand puppets, old can openers and 1.4 million items as varied as cyberspace itself. But what distinguishes eBay from other Internet commerce venues is that it views itself foremost as a "community." It is a place governed by rules, honor and trust, where citizens judge the decency of their transaction partners on public "feedback forums." Reputations hold as much value as great bargains here, and this ethic engenders utopian belief in the site among many of eBay's 2.1 million users.
Wall Street has been seduced as well. The company's shares debuted at $18 in September and closed Friday at $277.62½. Its total stock market value is already eight times that of old-line auctioneer Sotheby's.
Only three years old, San Jose-based eBay Inc. is now the second most popular site on the Internet (after Yahoo) when measured by the total time users spend there. It is also the rare Internet firm that is profitable – earning $2.4 million last year, mostly from the commissions it receives on each sale.
But beyond its investor allure and corporate success, eBay is being studied as a broader phenomenon. Industry watchers are proclaiming it the latest Internet "lifestyle brand," in the tradition of America Online, Netscape and Amazon.com. It mingles the core dimensions of all three – AOL's interactive forum, Netscape's browse-around sensibility, Amazon's commercial appeal.
The site's rapid adoption signals a new phase of the Internet's cultural evolution, said Paul Saffo, a director at Institute for the Future, a Silicon Valley technology think tank. Before, he said, "cyberspace" was widely perceived was an abstract highway to be traveled; now, as eBay exemplifies, the Internet is becoming a "cyburbia," a destination where people set down roots and stay.
Devotees of eBay are often less likely to make friends with their physical neighbors than with kindred hobbyists they meet in the site's online discussion forums. Theirs is a community "fragmented into thousands of little specialized subcultures," said Chita Jing, an eBay friend of Sharon Doney who lives in San Diego.
Stories of heartfelt eBay outpourings are rampant. Last month, an eBay chat group devoted to collecting Beanie Babies held a "Secret Santa" party, at which more than 100 users simultaneously opened gifts they had sent to each other. (As of yesterday, there were 72,578 Beanie Babies items listed on the site.)
Yet this community emphasis also renders the eBay phenomenon as tenuous as human nature. "There are power struggles, rogue elements and heroes here," said Jing. Recent months have yielded some embarrassing instances of fraud and harassment on the site, as well as seamy tales of people peddling illegal weapons, child pornography, soiled underwear, even human body parts.
"I worry that this community will sabotage itself," said Sandy List of Rockville, an eBay community activist who was recently expelled from the site for what the company considered her overly aggressive pursuit of dishonest participants.
All of which distills a question that is recurring often in eBay circles: If a community grows by 75,000 users every week, can it still retain the qualities that made it a community? Or does it become an ominous city, full of dark corners and shady lurkers, a place where you wouldn't want to walk down the street alone?
Roots of an Enterprise
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eBay is physically based in a San Jose office park. Employees freely mix avocation with vocation here, and many cubicles reflect the same collectors' mentality that sustains the business. Robin Rosaan, for instance, who coordinates all of eBay's Elvis-related items, has 3,046 in her personal collection.
"I just got a call from the Elvis guy in Chile," said the 52-year-old Rosaan, a life-size Elvis cutout looming over her. "It's so exciting for me."
The early history of eBay offers similar testimony to idiosyncrasy. Silicon Valley software developer Pierre Omidyar created the site in 1995 with small ambitions: He wanted to help his then-girlfriend (now fiance»e) bolster her collection of Pez dispensers. Omidyar set up a World Wide Web site – a sort of electronic auction bay – where fellow Pez enthusiasts could buy, sell and trade. The Pezzers flocked, his girlfriend's collection grew and Omidyar glimpsed opportunity.
The 31-year-old founder is now worth well over $3 billion.
Because buyers and sellers execute all exchanges of goods themselves, eBay is spared inventory, transportation and other overhead costs. The company's one tangible relationship to these sales arrives in San Jose by mail each day in the form of boxes full of commission checks.
Omidyar is invoked as a kind of mythic visionary among eBay loyalists – particularly the company's 138 employees, who often precede their remarks with "Pierre always says." They speak in similarly cult-like tones about "The Community," and how eBay's core sensibilities must be honored.
"We have this expression, 'eBaysian,' " said Steve Westly, the company's vice president of marketing and business development. "Something eBaysian reflects our beliefs. It's hard to define in words, but we know what is eBaysian when we see it."
"eBaysian" is grounded in "treating people well and trusting them," Westly said. It is the ethic from which eBay's essentially laissez-faire community model flows. The company reasons that its elaborate "feedback forum" serves as a self-regulating mechanism that encourages good behavior and high morals. That's why eBay sellers frequently send off their collectibles without having received payment for them.
If eBay buyers and sellers find their transaction partners polite, attentive and honorable, they are encouraged to post praise about them on a public message board. Or, if displeased, eBayers can post negative remarks. Participants who own a net feedback rating of over 10 see their names adorned with a star each time they enter an auction; those who receive scores of minus four or worse are kicked off the site, either temporarily or forever.
eBayers often wear good ratings as a badge of civic honor. "I have a feedback rating of 733," said Scott Samuel, 32, a collector from Chicago, and his one negative haunts him. "I had a family crisis and I misplaced an item I was selling. I explained the situation to the buyer and returned his money. But he posted a negative on me anyway. It really bothered me."
Lately, eBay executives have come to realize the feedback system has its limits. As communities grow, so do the chances of antisocial behavior – a point made starkly in series of recent episodes.
Last month, eBay helped produce a Toys for Tots charity auction that included a "Today" show jacket autographed by costars Katie Couric and Matt Lauer. Couric and Lauer touted the escalating offers on the air; the bidding reached $200,000.
But the high bidders turned out to be teen pranksters; the best legitimate bid was just $11,400 – still an enormous sum for a jacket, but not the public relations coup eBay was seeking.
It was around that time that postal inspectors began investigating Sonny Stemple, an Oklahoma man accused of bilking fellow eBayers of more than $10,000 by auctioning nonexistent items and cashing the money orders. eBay received dozens of complaints and suspended him from the site. They encouraged victims to contact law enforcement authorities, but deny liability.
"Pierre's philosophy is 'make as few rules as possible and get out of the way,' " said Mike Wilson, eBay's vice president in charge of site operations.
Nonetheless, this month – just before New York City announced it was investigating eBay over a series of fraud complaints – the company toughened its site bylaws. For instance, some participants have inflated their community reputations by encouraging friends to send positive feedback – even if they've never conducted business together. Conversely, some users have been known to "feedback bomb" their eBay adversaries, trashing their reputations and placing them at risk of expulsion.
Under the reformed rules, eBay is cracking down on "feedback abuse." Also, the company is now offering free insurance against fraud, and making it easier to use third-party escrow services to hold payment until goods are delivered.
Auction Fever
Online auction house eBay has become one of the most closely watched companies in the country, a Wall Street highflier and an odd cultural phenomenon as well. Its success signals a new stage in the Internet's invasion into contemporary lives.
Rare Boyd's Plush Canadian Elfbear
1st bid: $ 1
Current: $ 1,324
Auction ends: 8:13 a.m. today
1984 Mercedes 380sl Convertible
1st bid: $ 500
Current: $ 9,600
Auction ends: 8:41 a.m. Monday
Canadian Maple
Beanie Baby
1st Bid: $ 9.99
Current: $ 41.50
Auction ends: 9:23 a.m. Monday
Alexander the Great Tetradrachma Coin
1st Bid: $ .01
Current: $ 350
Auction ends: 5:35 p.m. today
Michael Jordan Signed 1992 Game Olympic Shoe
1st Bid: $ 5,000
Last: $ 17,923
Auction ends: closed
The eBay Explosion
Business: A person-to-person trading community on the Internet.
Established: 1995
Employees: 138
Internet address: www.ebay.com
Number of users in 1995: About 10
Number of current users: 2.1 million (75,000 new users a week)
Number of items for sale yesterday: 1.4 million, including 72,578 Beanie Babies, 29 Monica Lewinsky items and one antique eye dropper.
Rules of the Game: Users are subject to feedback posted on eBay's site, about their integrity in handling transactions.
Net Income
1996 $150,000
1997 $870,000
1998 $2.4 million
Sources: eBay, Bloomberg News
"What town has ever grown from 100,000 to 2 million in less than a year?" said Meg Whitman, eBay's chief executive. "We're trying to evolve and cope as best we can."
eBay's security function centers on an in-house policing and regulatory body known as "Safe Harbor," which monitors the site for inappropriate conduct. Safe Harbor can terminate any user for an action deemed in violation of community standards – be it rudeness or an inappropriate bidding practice.
Wilson boasts that eBay's technology can instantly "vaporize" a user from the site. "We call it a weapon of mass destruction," he said.
Some users call eBay an ineffectual police state, doling out random discipline without due process. Rockville's Sandy List has become a cause celebre because of this issue.
List believed eBay was not doing enough to combat scamming. "There was a Wild West atmosphere on the site," she said. So she took the law into her own hands and began hunting down and reporting community menaces – sometimes spending 12 hours a day at it.
"I picked a lot of fights," said List, a 40-year-old government worker. She won't say at which agency she works because an eBayer she pursued is stalking her online, she says.
"I figured the strength of the community was going to make or break eBay," List said. "I viewed my involvement in weeding out trouble as a community investment."
But eBay viewed it as vigilantism and "vaporized" her account in November. Asked about List, a procession of eBay executives shook their heads and refused to comment for the record.
The company says that practically all eBay transactions are conducted honorably; 99.99 percent are completed with no problem. Ultimately, e-Bay insists, the community is sustained and enriched by the human impulse to do good, a credo that is invoked with an infomercial-like evangelism.
"It's easy for people to focus on the fraud cases," Whitman said. "But we get so many thank you letters, too. People say, 'eBay has restored my faith in humanity.' "
Spawning Spinoffs
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eBay has spawned several entrepreneurial spinoff businesses. Scott Samuel, for instance, runs a service to help eBay merchants count how many people visit their auction areas. He responds to between 200 and 300 e-mail inquiries a day on eBay-related matters, he said. Because he doesn't charge for the service, Samuel makes most of his money selling on eBay. In the week before Christmas alone, he sold 84 items – an antique Hamm's beer sign, an old Seattle Pilots spring training program, four pieces of Depression glass – and grossed $2,500.
Earlier this month, when Michael Jordan announced his retirement from the NBA, Samuel purchased a stack of the next day's Chicago newspapers for $8.50. Within a few days, he had auctioned them all for $86.50.
"Now, when I walk into a sports bar or something, my eyes will wander around the room and I'll think, 'Wow, that might sell,'‚" said Samuel. "You wind up looking at the world in terms of what might have value to somebody."
eBay executives maintain this is not uncommon. "We always hear about the Grandma Elsie confined to her home," said Keith Antognini, eBay's senior manager in charge of customer support. "It turns out that old vase in her garage is an antique. Then it sells for $500 and suddenly she's in business."
Indeed, beyond community ardor, transactions are what drive the phenomenon. eBay offers, above all, the opportunity for a deal. The race for bounties is what gives eBay its competitive juice – and keeps its users hooked. Participants often describe their eBay devotions in the harsh terms of addiction: They crave "bid fixes," suffer "eBay withdrawal" and glory in "euphoric buys."
"People often forget this with all the interactive soap opera [stuff] that goes on," said one eBay collector of sports memorabilia in Palo Alto, Calif., who asked not to be named for fear of being "feedback bombed." "If it weren't for e-commerce, the site would dry up in a second."
Participants speak often about how eBay has cut significantly into their work and sleep time, how they need to check the status of their auctions several times a day. Like many eBayers, Chita Jing said she will always visit the site within 10 minutes of waking up in the morning. If an auction's time is running down, Jing will stare obsessively at the screen, then pounce – or "snipe" – at the last instant. The key to effective bidding, she said, is a good timepiece synchronized perfectly to eBay's central clock.
So it was, fittingly, a timepiece that brought Jing her greatest eBay ecstasy. Last month, she purchased a "truly thrilling" Pulsar watch – gold-colored, with a touch of red – for $15.50. Jing said it would sell in a store for about $120.
"When I first looked at the watch, I found it so unexpectedly beautiful," she said. "I don't think I was that excited when I bought my first house."
© Copyright 1999 The Washington Post Company
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