EBay Is the Single Most Influential Company of the Modern Era
Tech is absolutely triumphant in our world. Today, seven of the top 10 companies by market cap are technology companies. Two of these have become the first trillion-dollar companies. And investors talk of the fearsome FAANG stocks (Facebook, Apple, Amazon, Netflix and Google) who between them seem to have sewn up entire markets ranging from ecommerce to video to advertising. But, there is one once high-flying tech company that seldom gets mentioned anymore: eBay. From a historical perspective, eBay is perhaps the single most influential company to lay the groundwork for the modern era, so its comparative obscurity is unfortunate.
Don't believe me? Think of what eBay has wrought.
EBay taught us all to trust strangers online. You can go back and read business articles from the '90s where people wonder whether anyone will even trust their credit cards to reputable companies online, much less some schmo halfway across the country. EBay helped make ecommerce palatable and friendly, and it taught us that yes, in fact, you can successfully do business with people you've never met.
EBay taught us to trust strangers via its vaunted reputation system. This was largely dreamed up by Pierre Omidyar, et. al., because they didn't want the hassle of adjudicating disputes between their members. Better to let the members do it themselves. Quite by accident, they taught us all that large groups of strangers could self-organize and self-police and, more or less, function as a self-sustaining community of users.
Today we live in a world where open source projects and things like Wikipedia are self-correcting organisms that get things more or less right. But, it's hard to imagine how radical a notion it was in the mid-1990s that any sort of order could be brought to the faceless din of the internet. Of course, now we live in a world dominated by the model of the five-star review. Where would things like Yelp or TripAdvisor be without this paradigm? Or Uber, or AirBnB or the entire gig economy?
EBay is today only about a third the size of its former subsidiary, PayPal, but noting that only does a disservice to the way eBay made PayPal and thus the very concept of modern digital payments mainstream. It's hard to imagine modern fintech highfliers like Square, Stripe and others would be where they are today without the path blazed by eBay and PayPal. And though the blockchain is an entirely different beast, without the popularizing of post-cash economies that eBay/PayPal did the grunt work for, whither Bitcoin?
There's a famous story that early on in eBay's development, big newspaper chains came to kick the tires, looking at a potential acquisition. (Whatever the conventional wisdom, publishers weren't dumb; they could see the threat to their classifieds cash cow.) But, the potential acquirers famously balked because "eBay didn't own anything." They were thinking of things like warehouses, or trucks or supply chains of course, but also something even more ephemeral. EBay didn't do anything. Only its users did. Sure, eBay was a marketplace, a platform ... but all of the value created was created by the users themselves. EBay had no claim on anything they did.
Over the last 20 years, this has become more common. Any social network has built its business on the activity of its users, on the serendipitous coagulation of all those people posting all that content. Most social networks have only been able to monetize this in aid of selling ads against our activities, so perhaps eBay's platform for actual economic commerce seems somehow more noble in comparison. But, eBay was the first to show that it was the users (in eBay's parlance that has been copied by so many others, the community) that were so valuable. In fact, more valuable than any other tangible asset. Network effects can be more valuable than gold.
As I've said, eBay's prominence in the tech industry has waned. The latest quarterly numbers are no longer anticipated with bated breath by analysts even as much as with an upstart like Snap. And as stipulated, perhaps PayPal turned out to be a "better" business than an online auction business ever could have been. And yet, maybe that's to eBay's lasting benefit. Unlike other tech companies that are forced to continuously reinvent themselves to stave off disruptors coming up from behind, and, of course, to deliver better numbers quarter after quarter, what if eBay is actually the tech company that has matured (and aged) the best? Out of the limelight, it is free to do the thing it was born to do, and the thing that it has never been surpassed at: being the best, auction-based marketplace that has even been devised.