Reviews

John Nettles

eBay's business model has always been deceptively simple: low overhead, narrow focus, top-to-bottom accountability, and most of all, paying attention to its customers. In other words, conservatism. Radical.


Publisher: Little, Brown, & Co.
Length: 332
Price: $25.95 (US)
Author: Adam Cohen
US publication date: 2002-06

-- onservative government is an organized hypocrisy."

Benjamin Disraeli (1845)

"Conservative" is a word in sore need of an intervention, having wandered far afield from its traditional meaning and fallen in with a bad crowd. After all, a "conservative" is one who conserves, and yet in the modern political arena the burden of conserving things -- the environment, civil liberties -- has become the bailiwick of liberals. Even if we stretch the word to encompass its connotations of frugality, adherence to time-proven ideas, and a maintenance of the status quo, one is hard-pressed to ascertain how a man who blithely calls for exorbitant spending on unspecified defense goals, proposes the creation of a new national deficit in the midst of an economic recession, and advocates turning huge chunks of the Constitution ass-over-teakettle can call himself a "conservative" even if he is the President.

The murky nature of "conservatism" is even more apparent in the wake of the current crisis of confidence shaking up the stock market as multibillion-dollar corporations like Enron and WorldCom fall to earth. Despite close, even intimate, ties to prominent conservatives in government, it is precisely the failure of these companies to adhere to the principles of conservatism that brought them down. Call me kooky, but profligate spending, adventurous (to put it mildly) accounting practices, and the casual tossing of customers, employees, and shareholders to the wolves just don't seem like the sort of things true "conservatives" should do.

For these reasons and more, it would behoove anyone considering taking the plunge into the entrepreneurial shark tank to read Adam Cohen's The Perfect Store: Inside eBay, a close look at the history of the wildly successful Internet auction site. Cohen, a reporter for Time and The New York Times, was given unlimited access to eBay's operations for months and his field report is often fascinating and thoroughly educational. From its origins as one man's off-hours hobby to its glory as one of the few companies not only to survive the dot-com crash but actually thrive, eBay's business model has always been deceptively simple: low overhead, narrow focus, top-to-bottom accountability, and most of all, paying attention to its customers. In other words, conservatism. Radical.

The story of eBay reads like something by Horatio Alger -- single individual starts out with nothing but a good idea and becomes a success through hard work and perseverence -- but freakishly good timing plays a part in the tale as well. In the mid-1990's Pierre Omidyar, a Mac platform programmer, saw great potential in the nascent Internet but had no real ideas for the elusive "killer app" on which he could capitalize. Teaching himself web page-building in his spare time, Omidyar created a few pages on his personal account, including one devoted to the Ebola virus and one that sought to streamline auctions of used computer hardware that were a regular feature of the usenet groups he frequented. This latter page, which he called AuctionWatch, began to garner traffic and a surprised Omidyar found this part of his hobby occupying more and more of his time as he mediated disputes and answered email questions from his visitors. Finally he threw up his hands and began listing email addresses, telling his customers to work things out amongst themselves. Traffic on the page became so heavy that Omidyar's ISP upgraded his service and charged him a business rate of $250 per month. Rather than fold up his tent, as was his initial urge, Omidyar experimented with charging a per-auction user fee of a few cents. Within a month, enough nickels and dimes came to his mailbox to cover his Internet bill with a small profit, making his site one of the only dot-coms ever to turn a profit from the get-go. The "killer app" had materialized.

Omidyar, something of a back-porch philosopher, speculated that the auction was the perfect microeconomic model. Rather than the artificial and highly flawed process of fixed-price selling, auction selling implicitly determined the worth of an item by the demand of its consumer, thus insuring that anything sold would sell at its true value. And because an online auction meant virtually no overhead -- no storage of goods and a bare minimum of manpower -- the miniscule user fees Omidyar charged were, in sufficient quantity, enough to turn a hefty profit margin: an unheard-of 80 percent for most of eBay's existence, in fact. Within months, Omidyar had quit his day job, taken on a partner, dropped the Ebola page, and launched the venture that would allow him to retire at 32, a billionaire.

EBay was not the first auction site on the web and has never been the only one, yet its success has yet to be matched by its rivals. Given the incredible simplicity of its operation -- really, what is it beyond simply a conduit for sellers to post pictures and text and for users to type and click? -- one would think the online auction biz would be one crowded horse race, and yet the secret of eBay's success lay in two vital intangibles. First was Omidyar's ruling admonition to "spend the company's money as if it were your own." While other dot-coms were overextending themselves by purchasing the trappings of anticipated success, eBay's employees (including Omidyar, CFO Jeff Skoll, and CEO Meg Whitman) sat in equally apportioned cubicles behind office-supply desks they assembled themselves, keeping costs down while maintaining an egalitarian atmosphere even as the enterprise grew and the office began crawling with Stanford MBA grads.

The second and most important factor in eBay's rise was a constant, even obsessive, focus on feedback from its customers. Most e-commerce companies tend to discourage interaction with their respective customer bases, regarding them as little more than "eyeballs with wallets," but Omidyar, Skoll, and Whitman rightly viewed eBay's customers as a community of sellers and buyers and made customer loyalty their top priority. They paid close attention to discussions and concerns raised on the site's message boards, noting that the company's biggest entrepreneurial missteps tended to be those undertaken without running the ideas by the peanut gallery first. Evidence of the wisdom of this policy may be seen in every instance, including an organized mass defection by disgruntled users, where eBay traders attempted to take their business to other auction sites and found themselves in a shallow market with fewer opportunities and an impersonal atmosphere that sent them scurrying back to eBay.

Appropriately, therefore, Cohen devotes a great deal of ink to the customers themselves, interweaving their stories with eBay's. He introduces us to the message boards' first celebrity, Uncle Griff, who created the online persona of a cheerful cross-dressing maniac who kept his mother tied up in the closet while dispensing invaluble tips on streamlining the auction process to other users. We meet the college student who auctioned off every one of his possessions (even his birthday) and then traveled around the country visiting his stuff, and a woman who is passionately devoted to the concept of eBay but has declared a private war on the company over its increasingly corporate nature. Cohen also relates the stories of people who used eBay as a basis for starting their own businesses, such as the woman who made a fortune selling packing supplies and the man who developed the online payment system PayPal, as well as academics who branched into "eBay Studies" with such topics as Internet addiction syndrome and new economic paradigms of supply and demand.

The rise of the Internet has been called one of the ten most significant technological advances of the last century, if not the most significant. It has affected the way we do business and educate our children, influenced our very language, and provoked a profound change in the nature of human interaction. Even though the sociology has changed, however, we often lose sight of the fact that at the end of every connection sits a person who is still guided by the same old principles of economics and psychology. For entrepreneurs and others who hunger to make their fortunes online the seductive power of techno-dazzle can be overwhelming, but as the success of eBay has demonstrated, it's not the software that counts, it's the interface. Frugality, focus, and customer service still win the day. Much as it pains me as a member of the Liberal Media Conspiracy to Distort Facts and Bring Down America to say it, it pays to be conservative.


Music

Books

Film

Recent
By the Book

Jack Halberstam's 'Wild Things: The Disorder of Desire' (excerpt)

Enjoy this excerpt of Wild Things: The Disorder of Desire, wherein Jack Halberstam offers an alternative history of sexuality by tracing the ways in which wildness has been associated with queerness and queer bodies throughout the 20th century.

Jack Halberstam
Music

Sotto Voce's 'Your Husband, the Governor' Is Beautifully Twisted DIY Indie Folk-rock

Singer-songwriter and multi-instrumentalist Ryan Gabos releases another odd, gorgeous home studio recording under the moniker Sotto Voce.

Music

Numün's 'voyage au soleil' Is a Trippy, Ambient Ride and Ambitious Debut

Eclectic instrumental trio numün combine a wealth of influences to create a vibe that's both spacey and earthy on voyage au soleil.

Music

L7's 'Smell the Magic' Is 30 and Packs a Feminist Punch

Abortion is under threat again, and there's a sex offender in the Oval Office. A fitting time, in short, to crank up the righteously angry vocals of feminist hard rock heavy hitters like L7.

Books

Can Queer Studies Rescue American Universities?

Matt Brim's Poor Queer Studies underscores the impact of poorer disciplines and institutions, which often do more to translate and apply transformative intellectual ideas in the world than do their ivory-tower counterparts.

Music

Jim White Offers a "Smart Ass Reply" (premiere)

Jesus and Alice Cooper are tighter than you think, but a young Jim White was taught to treat them as polar opposites. Then an eight-track saved his soul and maybe his life.

Music

Ed Harcourt Paints From 'Monochrome to Colour'

British musician Ed Harcourt's instrumental music is full of turbulent swells and swirls that somehow maintain a dignified beauty on Monochrome to Colour.

Music

West London's WheelUP Merges Broken Beat and Hip-Hop on "Stay For Long" (premiere)

West London producer WheelUP reached across the pond to Brint Story to bring some rapid-fire American hip-hop to his broken beat revival on "Stay For Long".

Music

PM Picks Playlist 4: Stellie, The Brooks, Maude La​tour

Today's playlist features the premiere of Stellie's "Colours", some top-class funk from the Brooks, Berne's eco-conscious electropop, clever indie-pop from Maude Latour, Jaguar Jonze rocking the mic, and Meresha's "alien pop".

Culture

Plattetopia: The Prefabrication of Utopia in East Berlin

With the fall of the Berlin Wall came the licence to take a wrecking ball to its nightmare of repression. But there began the unwritten violence of Die Wende, the peaceful revolution that hides the Oedipal violence of one order killing another.

Film

What 'O Brother, Where Art Thou?' Gets Right (and Wrong) About America

Telling the tale of the cyclops through the lens of high and low culture, in O'Brother, Where Art Thou? the Coens hammer home a fatalistic criticism about the ways that commerce, violence, and cosmetic Christianity prevail in American society .

Music

Electrosoul's Flõstate Find "Home Ground" on Stunning Song (premiere)

Flõstate are an electrosoul duo comprised of producer MKSTN and singer-songwriter Avery Florence that create a mesmerizing downtempo number with "Home Ground".

Music

Orchestra Baobab Celebrate 50 Years with Vinyl of '​Specialist in All Styles'

As Orchestra Baobab turn 50, their comeback album Specialist in All Styles gets a vinyl reissue.

Music

Hot Chip Stay Up for 'Late Night Tales'

Hot Chip's contribution to the perennial compilation project Late Night Tales is a mixed bag, but its high points are consistent with the band's excellence.

Music

The Budos Band Call for Action on "The Wrangler" (premiere)

The Budos Band call on their fans for action with the powerful new track "The Wrangler" that falls somewhere between '60s spy thriller soundtrack and '70s Ethiojazz.

Music

Creature Comfort's "Woke Up Drunk" Ruminates on Our Second-Guesses (premiere)

A deep reflection on breaking up, Nashville indie rock/Americana outfit Creature Comfort's "Woke Up Drunk" is the most personal track from their new album, Home Team.

Books

For Don DeLillo, 'The Silence' Is Deafening

In Don DeLillo's latest novel, The Silence, it is much like our post-pandemic life -- everything changed but nothing happened. Are we listening?

Music

Brett Newski Plays Slacker Prankster on "What Are You Smoking?" (premiere)

Is social distancing something we've been doing, unwittingly, all along? Brett Newski pulls some pranks, raises some questions in "What Are You Smoking?".


Reviews
Collapse Expand Reviews



Features
Collapse Expand Features

PM Picks
Collapse Expand Pm Picks

© 1999-2020 PopMatters.com. All rights reserved.
PopMatters is wholly independent, women-owned and operated.