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Posts from the ‘eBay’ Category

Steve Jobs, BMW & eBay

There have been so many articles posted on Steve Jobs in the past week, I really thought I wasn’t going to add one here on my blog.

However, yesterday, John Lilly wrote a great piece on Steve Jobs yesterday, and I realized I might have a story worth telling after all.  I find myself fortunate, in retrospect, to have joined Apple in 1996 as an intern, and then full time in 1997 just weeks before Steve Jobs took the helm as interim CEO.

A Tale of Two Meetings

As an outgoing intern of the Advanced Technology Group, I actually did attend the meeting that John describes in his blog post.  However, as a full time engineer on WebObjects, I also had the opportunity to attend a different all hands that Steve Jobs called for the entire Rhapsody team (the codename of the project that became Mac OS X).

If you haven’t read John’s post, it’s definitely worth reading in tandem with this one.  He does a great job capturing the insights from the ATG meeting.  Instead, let me add to the story with my recollection of the Rhapsody meeting that happened the same week.

(Note: It has been over fourteen years since the meeting, so don’t take this as a literal play-by-play.  I have no notes, so all quotes are from memory.  But this is how I remember it.)

The “Michael Dell” Meeting

The mood of the Rhapsody team meeting was energetic, but mixed.  More than any other group at Apple, the Rhapsody team required a combination of talent from both long time Apple engineers and newly merged NeXT engineers.  There was a palpable sense of excitement in the room, as particularly the NeXT team had a huge amount of respect for the “incoming administration”.  At the same time, there was an element of discontent around suddenly finding themselves part of a large company, and even some skepticism that Apple was salvageable.

Steve got on stage at the front of the room in Infinite Loop 4, and put a huge, larger than life picture of Michael Dell on the wall.  He repeated the news fodder that Michael Dell had been asked recently what he would do if he was running Apple Computer.  (At the time, Dell was the ultimate success story in the PC industry.)  Dell said that he would liquidate the company and return the cash to shareholders.

A few gasps, a few jeers and some general murmuring in the audience.  But I don’t think they expected what he said next.

And you know what? He’s right.

The world doesn’t need another Dell or HP.  It doesn’t need another manufacturer of plain, beige, boring PCs.  If that’s all we’re going to do, then we should really pack up now.

But we’re lucky, because Apple has a purpose.  Unlike anyone in the industry, people want us to make products that they love.  In fact, more than love.  Our job is to make products that people lust for.  That’s what Apple is meant to be.

What’s BMW’s market share of the auto market?  Does anyone know?  Well, it’s less than 2%, but no one cares.  Why?  Because either you drive a BMW or you stare at the new one driving by.  If we do our job, we’ll make products that people lust after, and no one will care about our market share.

Apple is a start-up.  Granted, it’s a startup with $6B in revenue, but that can and will go in an instant.  If you are here for a cushy 9-to-5 job, then that’s OK, but you should go.  We’re going to make sure everyone has stock options, and that they are oriented towards the long term.  If you need a big salary and bonus, then that’s OK, but you should go.  This isn’t going to be that place.  There are plenty of companies like that in the Valley.  This is going to be hard work, possibly the hardest you’ve ever done.  But if we do it right, it’s going to be worth it.

He then clicked through to a giant bullseye overlayed on Michael Dell’s face.

I don’t care what Michael Dell thinks.  If we do our job, he’ll be wrong.  Let’s prove him wrong.

All I can remember is thinking: “Wow. Now that’s how you regroup, refocus and set a company in motion.”  I had seen speeches by Gil Amelio in 1996, and there was nothing comparable.  Please remember, at this point in time it wasn’t at all obvious that Steve or Apple would actually succeed. But I felt like I’d witnessed a little piece of history.

Fast Forward: eBay 2006

That meeting left a huge impression on me that extended well beyond Apple.  Steve’s actions and words at Apple in 1997 represented the absolute best in leadership for a turnaround situation.

It wasn’t until 2006, however, that I found myself at another large technology company looking to rediscover itself.  In the summer of 2006, I was one of a relatively small number of product leaders to tour a draft of a new initiative at eBay called “eBay 3.0″.  Led by the marketing team, a small, strong team had done a lot of research on what made eBay different, and what people wanted from the eBay brand.  The answer was that eBay was fun, full of serendipity, emotion, thrill.  The competition of auctions, the surprise at discovering something you didn’t know existed.  This reduced into a strong pitch for eBay as “colorful commerce”.

I was excited about the research and the work, because it echoed some of the things I remembered about Steve & Apple, and the simple vision he had for a company that made products that people lusted for.  But I also remember voicing a strong concern to several members of the team.  I told them about Steve’s speech to the Rhapsody team, and asked: “Does eBay want BMW market share, or Toyota market share?”  At the time, eBay was more than 20% of all e-commerce, and all plans oriented towards growing that market share.

Unfortunately, eBay tried to do both with the same product.

It’s not typical for a large, successful public company to basically say market share doesn’t matter, and to drive a company purely around a simple focus and vision.  When things are the toughest, unfortunately, that’s when leadership and vision matter the most.

Final Thoughts

Who would have imagined that Apple would have the largest market capitalization in the world?  Who would have thought that in the year 2011 that Apple – not Microsoft, not Dell, not Sony – would be defining the market for so many digital devices and services?

Most importantly, who would have thought that a leadership mandate that eschewed market share would achieve such dramatic gains?

Apple so easily could have gone the way of SGI, the way of Sun.  Instead, it literally shapes the future of the industry.  All because in 1997 Steve was able to offer a simple and compelling reason for Apple to exist.  A purpose.  And it’s a purpose that managed to aggregate some of the most talented people in the world to do some of their best work.  Again and again.

So I will add here a simple thank you to Steve Jobs for that meeting, and for changing the way that I think about every company’s purpose – their reason to exist.  Rest in Peace, Steve.

eBay’s Value Problem is a Search Problem

It has been quite a long time since I posted here about eBay.  I still use the site regularly (I typically still list at least a few things every month), and while I may tweet about things from time to time, I rarely feel the need for a full blog post.

On January 21st, Ikai Lan (@ikai) posted this tweet:

What’s the big deal, right?  So what if Ikai found a better deal on Amazon for his Star Trek geekfest?

Here’s the big deal. This was my response to Ikai:

The issue here isn’t that I was somewhat obnoxious (although clearly, I was a bit obnoxious).  Ikai & I worked together at LinkedIn, so it’s not unexpected to have a little bit of fun with the back & forth on Twitter.

The problem is that Ikai is a smart, technical guy.  He’s also someone who looks for a good deal.  If someone like Ikai thinks that Amazon has a cheaper price on an item like the complete DVD collection for Star Trek DS9, then eBay has a real problem.

eBay’s Value Problem

When I wrote my Eulogy for eBay Express in 2008, I talked about four key value propositions that eBay navigates: value, selection, trust and convenience.  One of the motivating factors behind eBay Express was trying to find a way to leverage eBay’s huge advantages in value and selection, while shoring up perceived weaknesses in trust and convenience.

But here we are in 2010, and while eBay has the item, apples-to-apples, for over $100 less than Amazon.com – Ikai didn’t know it.  And you know what?  If a low price falls in the forest and no one is around to hear it, it doesn’t make a sound… or a sale.

eBay’s Value Problem is actually a Search Problem

The point is, despite the fact that Ikai is an engineer working at Google, he couldn’t find the item.  So a $115 price advantage was nullified.   Why?

I’m not a 100% sure what Ikai did to identify the proposed “$350 price”.  When I searched on eBay, I found literally dozens of items priced below $300, many of which were from top sellers, and many of which that offered returns.  In fact, I saw items as low as $130, but I tried to find the lowest priced item that matched the quality of service Ikai would expect from an Amazon third party seller.

Of course, I’ve been on eBay since 1998, and I spent years working on structured data and search products at eBay, so I have a hunch why I found the items and he didn’t.

He typed the wrong query. My guess is that he typed something like this “Star Trek DS9 season 1-7” in the DVD category.  Makes sense, right?  Unfortunately, this only returns two items, the cheapest of which is $299.

Despite years of investment, the eBay search engine still doesn’t understand that “DS9 = Deep Space Nine”, and that “1-7″ is a range, and that “season” is an attribute that DVD sets for television series can have.

Now, what I did do?  Simple:

  1. I typed the query “deep space (nine, 9)”
  2. I selected the category for DVD
  3. I selected “Buy It Now” for listing type
  4. I sorted from highest price to lowest

Let’s review the tricks I used:

  1. The () notation is how the eBay search engine does OR.  So I was able to find listings with both “nine” and “9” in them.  To be fancy, I could have used “DS9″ in there too, but it wasn’t necessary.
  2. Filter to DVD category to clean out other clutter.
  3. I figured Ikai didn’t want to bid on an auction
  4. Sorting from high to low is a counter-intuitive trick, but if you assume that the collection will be more expensive than individual DVDs, it makes sense.  I use this all the time with high priced items, since quality tends to float to the top.

I then scanned down the list to find the cheapest collection sold by a credible seller (someone with high feedback and % satisfaction).  And then I tweeted it to Ikai.

Would anyone else know how to do this? Would anyone else want to do this?

I do it, largely because I still love eBay, and because I actually know how to do it.  Plus, I really appreciate saving money on items like this, so the $115 is worth a few minutes.

But all I know is that if eBay can’t leverage it’s intrinsic price advantage with buyers like Ikai, then it has a serious problem.  They can never beat Amazon or traditional retailer e-commerce sites on trust and convenience.  They can, however, beat them on price and selection.

But customers have to be able to find those advantages to value them.

2009 Platinum Eagles Sell Out: Speculation or Investment?

This past week, the US Mint sold out of the one ounce 2009 Proof Platinum Eagle.  As no bullion coins or fractional sizes were minted this year, it was the only US Platinum coin produced in 2009.

From CoinNews.net:

Released at Noon Eastern on Thursday, December 3, 2009, the Platinum Eagles were limited to a mintage of only 8,000. Over 7,200 of those sold in the first few days, even with a household order limit of 5 pieces in place. The US Mint sold just 4,769 of the one ounce proof coins during all of last year.

Some had theorized that this year’s run would be challenged by the high price of the coin ($1792.00) and the relatively unpopular new design.  However, given the huge demand for precious metals this year for investment (gold, silver, platinum, palladium), it’s hard to be completely surprised that this coin sold out so quickly.

Nope.  2008 the US Mint only sold 4,769 coins.  This year, they sell out early at 8000 coins.

The case for buying platinum right now is fairly strong:

  • The relative price of platinum to gold is extremely low, given gold’s huge run up.  A few years ago, platinum cost over 3x an equivalent amount of gold.  At current prices, the two metals are approaching parity.
  • Simple investment vehicles in Platinum and Palladium, like ETFs, do exist (they trade in London), but don’t have popular US versions (yet), so investment demand remains weak compared to it’s ETF-rich brethren of gold (GLD) and silver (SLV).
  • The automotive industry, which is the largest consumer of platinum and palladium, is extremely depressed.  However, since the demand for fuel efficient cars is growing, the use of these metals in catalytic converters and fuel cells seems to forecast significant future demand when the industry recovers.

That being said, I was surprised when I searched eBay for completed listings for the 2009 Platinum Eagle.  Normally, when there is a sell out at the US Mint, you immediately see panic buying on eBay for huge premiums over the US Mint price.

Here is the query.  What you see is that, as of December 12, the prices range from $1727 to $2050, hardly a premium given the transaction costs of eBay / PayPal which can easily run 8-9%.

As a result, I have to wonder:

  • Was the sell out the product of true individual demand for the coin?  Or was this a case of coin dealers speculating on a sell out and premium collectible opportunity?

The problem with the Platinum Eagle series is that it’s unclear how many collectors actually try to build “the complete set” of these expensive coins.  Set building is typically the primary driver for premium values for the silver and gold eagle series.

I’ll be watching the completed auctions closely this coming week.  There are a couple sellers already experimenting with higher prices.  Let’s see if they stick.

The Real eBay Magic: Irrational Commerce

It’s been quite a while since my last eBay-related post, and nine months since my high traffic post, A Eulogy for eBay Express.  However, this past week Keith Rabois wrote a fairly inflammatory article for TechCrunch that I thought was worth discussing.  Keith is currently an executive at Slide, and was formerly a founder at LinkedIn and an executive at PayPal, so his consumer internet credentials are fairly substantial.

His article was entitled:

TechCrunch: How Facebook, MySpace and YouTube Killed eBay

Told you it was inflammatory.

However, I’m not normally the one to take eBay flame bait.  After all, if I was, I’d be posting twelve times a day on the topic.  But Keith actually hit upon a deeper insight in his piece that is worth calling out, because it provides insight into both eBay and other successful, engaging web products.

Although it was always classified as an e-commerce destination, the quirkiness of the eBay marketplace was once a major source of entertainment on the Web. It was where people sought and bought everything from the first broken laser pointer to Beanie Babies to Bob Dylan’s boyhood home. While the catch—anything from an antique clock to a Gulfstream II—was rewarding for the buyer, it was generally the entertainment and excitement of the chase that brought a buyer to eBay in the first place.

This insight, that eBay’s success was driven by entertainment and engagement is extremely strong.

The rest of the article follows this path:

  • In January 2004, over 47% of internet users visited eBay once per month.
  • In December 2006, while the % of audience stayed the same, people were spending 3x the time on MySpace
  • In 2007 Facebook & Youtube added to this drift of attention and engagement (timeline is off here a bit, since Youtube took off well before 2007).
  • eBay stripped out the fun, not pursuing eBay 3.0 strongly enough, and then Donahoe pushed towards an Amazon-focused approach.  Fun gone.

I don’t personally agree with much of the deductive flow here, actually.  Overall, Myspace, Youtube & Facebook have significantly increased the engagement overall on the internet, taking metrics like “daily visits” and “daily unique users” and “time on site” to previously unthinkable numbers.  It isn’t a zero-sum game, per se, because the overall number of users and time spent on consumer internet sites has grown dramatically.

More importantly, the assessment of eBay 3.0 and the current strategy makes it sound like eBay’s current approach is largely management-driven, when in reality the overwhelming global scale and activity of eBay buyers (and sellers) has made the current direction almost fait accompli.  In 2006, the number of eBay listings that were fixed price (including store listings) was already well north of 50% and rising rapidly.  The marketplace was voting through billions of bids, BINs and listings, and it was voting for a higher and higher proportion of fixed price commerce.

But I digress.  The point is that Keith got something very, very right in his article about eBay.

eBay was never meant to be just e-commerce.  It was fun.  It was exciting.  It was empowering.

It was engaging.

There are a couple strong reasons for this.

First, if you’ve read my previous posts on game mechanics in the design of engaging software and websites, you’ll know I’m a big fan of Amy Jo Kim‘s work here.  In fact, eBay demonstrates all five of the “fundamental games” that humans like to play.  This wasn’t done intentionally, but it explains a lot of the almost visceral, addictive reaction that people had to eBay.

Second, eBay captured irrational economic behavior on both the buyer and seller side of the marketplace brilliantly.  Buyers exhibited a number of irrational behaviors that we now describe and associate with behavioral finance.

These irrational behaviors on the buyer side, combined with the game mechanics of the site, effectively created a lift in demand.  Combined with the transparency and breadth of the online marketplace, you had literally a huge multiplier on e-commerce demand.

On the seller side, however, engagement was driving irrational behavior too.  Buyers of collectibles became sellers in order to “fund their habits”.  (I know this personally, since I began selling coins on the site to help keep my PayPal “slush fund” fully tanked so I could buy coins…)   More than anything, people fell in love with the empowerment eBay offered.  You didn’t have to have $100,000 to open a business, an SBA loan, or an MBA.  The web was full of stories of people just driving around garage sales, picking up items on clearance at local department stores, and stocking up at flea markets.  Some of these sellers grew businesses that measured in millions of dollars, promoting hope that anyone could build a business on eBay.

Of course, there was a kernel of truth to this.  An unprecedented number of successful businesses were built over eBay.  But most sellers were nowhere near any sort of traditional business scale.  There is a reason, after all, that PowerSeller starts at just $1000 a month.  And that’s $1000 of sales revenue, not profits.

Can you imagine any real-world storefront with only $12,000 a year in sales?

People would spend 8, 10, even 12-hours a day looking for inventory, listing items, answering questions, and shipping goods.  When people went to the first eBay Live, they even made sure that on the road trip out to California, they brought enough packing materials to keep shipping items.  They made buyers happy because it wasn’t just a business for them, it was a way of life.

In every sense of the word, it was irrational commerce.  It was a labor of love, not economics.  Sure, it was a good way to pad the income of a family.  But for many the money was just a rationalization – they were really in it for the excitement, the activity, the empowerment, and of course, the community.  If you calculated the “wage rate” of many of these sellers, it would be shockingly low.  But no one did, because that wasn’t the point.  It was fun.  It was empowering.  And it was only just the beginning…

I didn’t get to go to the first eBay Live in 2002, but I did go to three starting with the third in New Orleans in 2004.  I’ll never forget, at one point Pierre was touring the booths (I believe he was giving a speech that day).  A group of us were discussing how to manage the insanity of the event – the intensity and sometimes aggression of some attendees who had to have every pin, every collectible.

I won’t get the quote right, but Pierre said something there that has stayed with me to this day.  To paraphrase, he said that he loved the energy, and that the insanity is part of what made eBay great.  If eBay became just another sales channel, then it would lose its magic.

It has been five years,  and for me personally the growth in my understanding of game mechanics, behavioral finance, and web 2.0 product design have given me terms and tools to help explain the irrational engagement that people had with eBay, and currently have with sites like Facebook, LinkedIn & Twitter.

eBay has a very metrics-driven culture, but while site and business metrics accurately reported the results of the incredibly engagement and activity on eBay, as always they never actually provided  the full picture around causality.

So, from my point of view, Facebook, MySpace & Youtube did not kill eBay.  (eBay, of course, is no where near killed in any case, since it continues to be an incredibly large and active site.)

Instead, eBay fell victim to a much more insidious threat than simple competition for eyeballs or time on site.  It fell victim to a version of the Innovator’s Dilemma.  There is a limit to how many people will wrap their lives around selling on eBay.  There is a limit to what percent of people’s purchases they will pursue through an auction process.  There is a limit to the disposable income to spend on collectibles and hard-to-find items – most purchases, in fact, are of new, standard commodity products.  Thus the company and the site follows the aggregated votes of hundreds of millions of buyers and millions of sellers, their “best customers”, and those votes are eventually dominated by the bulk of the e-commerce market.

Reading articles this weekend, like this piece in VentureBeat, they quote Donahoe in the Wall Street Journal as follows:

Asked about eBay’s identity, Mr. Donahoe said he wants shopping on the site to offer the same sort of low-price experience as buying at bulk retailer Costco Wholesale Corp. There, “the inventory is somewhat fluid, but everything they’ve got is a great deal,” he says in an interview.

(Ironic for me, since Costco was one of the examples we looked to frequently in the design and thought behind eBay Express.  I am a huge, unrepentent fan of Costco as both a customer and as a student of great companies.)

eBay 2009 cannot go back to the eBay of 1999, or even 2004.  The size and scale and make-up of the market means that any attempt to “crowd-out” the less engaging aspects of the market would mean drastically reducing the size of eBay.

That doesn’t mean there isn’t hope.  There is still time for eBay to re-invigorate its experience to capture and create elements that drive engagement.  There is time to learn from both the past and the present, and chart a course that will inspire and empower millions.

The original needs that drove eBay to success still exist.  People are finding some of the serendipity and empowerment from Craigslist… but it’s not as actionable or broad.   The game mechanics, for the most part, aren’t there.  Amazon has increased its breadth, but it’s truly an ecosystem designed for large sellers (by eBay standards).  Google has enabled independent websites to purchase traffic… to an extent.  But the more you make selling online like running a business, the more you lose that sense that this is fun instead of work.

Collectors still want to collect.  People still want to find ways to make a little extra money and to be a part of something bigger.  Little kids still collect and trade things from a very young age – no matter if they are stickers, baseball cards, Pokemon, or whatever small colorful items come in sets with variable rarity.  I sold my brother’s broken iPhone (he dropped it in the ocean) for $130 to a man on an island (Reunion) that I had never heard of.  Those eBay stories still exist. Small businesses are still being built on eBay.  Sellers are multi-channel, but eBay can and should offer them unique dynamics that capture a disproportionate amount of their attention, if not their business.  Apple has a small fraction of the computer market, but it captures the lionshare of its attention.  That could be eBay if it was prepared to act boldly and ask hard questions about what eBay reall should be… and shouldn’t be.

eBay cannot be MySpace, Facebook, LinkedIn, YouTube, or Twitter.  Nor should it be.

It should be eBay.

Update (5/27/2009): Turns out I had missed a great post from Rob Go on this same topic, just a few days ago.  Worth reading.

If Only I Could Use eBay to Short Sell Coins…

Caught this article yesterday on the new 2009 Lincoln pennies:

2009 Lincoln Penny Mania

A quick review of recently completed eBay auctions shows unmarked rolls selling for $30 to $50 each. Single pennies have sold for $2 to $4 each. Rolls with a Lincoln postage stamp and cancellation from the first day of issue at Hogdenville, Kentucky have sold for over $200. Most astoundingly, a single 2009-P Lincoln Cent graded NGC MS66RD and attributed “First Day of Issue” has sold for $400.

View the current eBay auctions.

It’s truly bizzare.  $0.50 rolls of the new Lincoln pennies are going for $30-$50 on eBay.  That’s insane.  We’re talking about a coin that will be minted in the hundreds of millions, if not billions, this year.

What I would love to do is to “short” these rolls – effectively presell them at this price, collect money now, and then send the rolls in a few months when you’ll be able to source them at less than $1/roll.

Unfortunately, that violates eBay policy. It’s for good reason, since short selling actual inventory is hard to distinguish from a scam transaction.  After all, how do you know the seller will make good on the future delivery?  What is the recourse for the buyer?

The lack of short selling, however, means that temporary supply/demand imbalances like this lead to effective price gouging for buyers who assume the eBay price is “fair”.  It’s certainly fair for the moment, but the expected ROI on this purchase for the collector is likely to be disasterous.

Still, I wouldn’t mind the ability to short sell a few hundred rolls.  If you have access to a bank that actually has these rolls, you’d be a fool not to put them up on eBay quickly, before the prices settle down.  Do I have any readers in Kentucky?  If so, can you pick me up a box?

Scot Wingo & Seeking Alpha: Traffic Drivers

It’s still fascinating to me how many insights I gain from the traffic to my own personal blog.

Today, I checked my stats briefly and noticed something really strange: my post about eBay Express, A Eulogy for eBay Express, had jumped with a vengence to the number one post on the blog.  My overall traffic spiked a bit too.  A little strange for a post that is over 6 months old.

Perusing my top referring sites, I saw one obvious culprit: eBay Strategies.  Scot Wingo has a new post up entitled Episode IV – How to fix eBay (you are here) – A NEW HOPE – Introducing eBay 2.0. It’s a long post, but there are a couple of paragraphs in it that point directly to my last eBay Express post:

You may recall an experiment eBay had called eBay Express where they tried to extend the brand with a different fixed-price site, but failed.  Ex-eBayer, Adam Nash had a great eulogy and behind-the-scenes view of what happened that I recommend everyone read to see his perspective.

I always likened eBay Express to diet donuts.  It just isn’t an extension and you are admitting that, well, if you have an eBay express, that makes eBay – what- eBay slow and poky?  There were other problems too that Adam details, like they didn’t send it any traffic and small things like that.  Also the way the inventory worked was all jacked-up, it was a sub-set of fixed-price items on eBay (what?!).  I’ve read all of Adams thoughts on eBay Express and chatted with him before on what eBay’s doing wrong/right and many of his ideas have found their way into eBay 2.0. (BTW, eBay needs to get this guy back.)

OK, it’s hard not to find that last line flattering.

Scot’s post is fairly long and detailed, and while I don’t agree with everything in the article, I did find all the talk of “New Coke” amusing in one sense.  You see, Malcom Gladwell’s book Blink had just been released when we kicked off the eBay Express concept efforts.  As a result, one of the specific guiding statements for the project was: “Don’t build New Coke.”  As I mentioned in my original post, one of our key goals for eBay Express was to NOT change the original eBay, but instead focus our efforts on a new site in order to protect what buyers & sellers loved about eBay.com.  Our analogy was, in fact, Diet Coke, which is not totally surprising given that I have an entire category for Diet Coke-related posts on this blog…

Still, the branding point around the name “eBay Express” is fair, and as I mentioned previously, branding was one of the obvious mistakes made in retrospect.

In any case, a little more snooping and I discovered that while eBay Strategies was the source of some of the new traffic, even more traffic was being sourced from the Seeking Alpha distribution of the article.  I’ve been an active reader of Seeking Alpha as an investment site for years, and I’ve noticed their recent push for sourcing content from any major blogger.  However, this is some real evidence that bloggers who leverage Seeking Alpha are likely seeing significant boosts in distribution.

I wonder if I have any posts that are Seeking Alpha worthy… I’ll have to think about experimenting with them at some point.  I’ve actually been cited in Seeking Alpha posts before, but typically with pointers to my articles on investing in Timber as an asset class

US Patent 7,490,056 Has Been Granted

Interesting milestone this week.  My very first patent granted.

USPTO: Patent #7,490,056

  • Filed: November, 2004
  • Granted: February 10, 2009

Ironically, I wouldn’t have known about it except for a promotion catalog I got in the mail today with a list of plaques I could buy to commemorate this patent from some souvenir company in Florida.  Yes, I know.  Weird.

This was the first of several patent applications I submitted while at eBay.  This particular application surrounded the logic and algorithm around assessing popularity for e-commerce listings based on “following” behavior, aka “Watch” in eBay terms.

Yes, this was the “Most Watched” patent, from the debut of eBay Pulse.  (Sadly, it looks like the patent office has actually moved faster approving this patent than eBay has updating eBay Pulse since that 2004 launch.)

There is a lot I could comment on here about the USPTO, the dubious nature of software patents, the length of time, etc.  Normally, I’d go on at length about some of these issues.

Instead, however, I’ll just note that it’s a somewhat sentimental moment for me, because I always remember hearing about how my late grandfather had filed an important patent on his path to business success.

Would You Ship a Broken iPhone to Réunion?

My brother dropped his iPhone in the Pacific Ocean.  An original, $399 iPhone.

Needless to say, saltwater does not do good things to an iPhone.  It doesn’t boot anymore.   No recourse with Apple or AT&T.  He had to get a new phone.

As a result, I ended up with my own variant of Pierre Omidyar’s famous broken laser pointer… I listed the broken iPhone on eBay.

Well, it sold today, for $122.50.  However, it sold to an international buyer… in Réunion.

Réunion, as it turns out, is a little island in the Indian Ocean, off the coast of Madagascar.  It is a French island, and happens to be the first place in world (due to time zone) to adopt the Euro.

So, would you ship a broken iPhone to Reunion?

They paid with PayPal.  All the info lines up, roughly.  eBay has a hotmail address for the user, but the payment came from a wanadoo.fr email address.  However, the name and address on both is the same, although eBay lists United States for the registered country (with the Reunion address).

That could be a sign of fraud.  Or it could be the sign of a user who moved.  eBay data is pretty messy at times.

He has made recent purchases with positive feedback.  A cheap piece of wireless equipment, and an expensive ($259) piece of tree climbing equipment.  So, not just trivial items.

So, do I ship it?  Not sure.  The worst that would happen is that the credit card would end up being stolen, so PayPal would seize the funds.  And I’d be out a broken iPhone.

But, on the plus side, selling to Reunion is a new destination for me.  I’ve sold to over 30 countries on eBay at this point, and it’s getting harder to attract buyers from new ones.

I think I’m going to ship it.

People are basically good… right?

Memories: The Leonard Speiser Mask & GoldenPalace.com

A couple weeks ago, there was a great reunion party for many eBay Product Managers & User Experience Designers from the past decade.  I didn’t get an exact count, but at least 70 people were there, including many of the early Product Managers from before I joined the company in 2003.

I was happily reminded of an event that I absolutely would have shared on this blog at the time – if I had been writing this blog at the time.  It seemed worthy of a posting now, three years later, especially since it comes with some dot-com bragging rights.

The event?  The time I sold a Leonard Speiser mask to Golden Palace Casino on eBay for $400.

speiser01_pic_1011

Strangely disturbing, isn’t it?

Details

The auction was put up in May, 2005, shortly after the official “going away” party for Leonard, which we held at the Tied House in Mountain View.  It was a large event, and we took up the back room.  There was food, drink, and the requisite roasting of Leonard “see attachment” Speiser.  (We’re not rolling back, we’re rolling forward!) It also included infamous video from a particular usability test, on permanent re-run.

It was a fun time, and as party favors everyone was given these hand-made copies of Leonard’s face, taken from his Halloween rendition of Harry Potter.  They were just color copies, stapled onto rulers.

On a lark, I listed one that night on eBay, hoping to raise money for his going away present.  I had recently launched the first version of eBay Pulse, a popularity page ranking queries, stores, and most watched items on eBay.  (There is actually a patent pending on the latter).  Through a grass roots email campaign, I got a sufficient number of eBay employees to watch the item, propelling it onto the “Top 10″ list for most watched items on eBay.

At that point, Golden Palace Casino found it.  At the time, they were buying up crazy items on eBay as a form of PR, starting with the famous Virgin Mary grilled cheese sandwich.  Yes, I know the memories are coming back to you now.

After some furious bidding, they won the item for $400, providing enough cash to buy Leonard an engraved video iPod (the hot item at the time).   He claims he still has it.  :)

In any case, we delivered the item, signed, to Golden Palace, and they posted it on their website.   It’s hard to find now, but a little Google sleuthing uncovered it.  Here’s what they had to say:

A handheld sign, made from a ruler and a cut-out of Leonardï’s head, was sold on eBay for $400.00. GoldenPalace.com bought the item, which was made for Leonard Speiser, an eBay Product Manager who was leaving his job. In order to raise money for the send-off party and roast, the sign was auctioned off on eBay. The sign has staples in it to roughly make a slot for the ruler, which you use to hold it up.

Itï’s funny to see actual eBay employees putting items up on eBay, but we are assured that: “this listing in no way, shape, or form represents any type of official eBay business. This listing is purely a loving gesture for one of the truly great members of the eBay community.”  Leonard will apparently be greatly missed by many, and they are trying to raise money for a going away present, to be given to him at the party. All the online casino got for their money is the sign and ruler; nothing more, nothing less.

Leonard Speiser went on to found Bix.com, which was acquired by Yahoo in 2006.  Leonard is still there, as you can see from his current LinkedIn profile.

Just in case he tries to feign ignorance of this whole event, I have proof he was a party to it:

speiser01_pic_100

This is such a fun memory, really symbolic of some of the best times at eBay… I’m really happy that I’m getting a chance to capture it here.

Two More First Spouse Coins for Sale

As I wrote last week, I’m saying goodbye to my First Spouse coins.  I’m moving through the series step by step.

The first coin sold for about 10% over the original purchase price last year.  Since that’s roughly the cost of eBay & PayPal fees, let’s just say that owning the coin did no damage financially.

This week, I have both Abigail Adams and Thomas Jefferson’s Liberty up for sale.

Bidding is on eBay all through the week.

Enjoy.

Goodbye, First Spouse Gold Coins. I’m Over You.

Just posted the first of my First Spouse gold coins on eBay

2007 First Spouse Proof Martha Washington Gold Coin

For those of you reading my blog for a long time, you know a couple things about my history with this series:

I’ve decided that this series of coins isn’t for me… it’s too much cash tied up in coins, and frankly most of the first spouses just aren’t that interesting to me.  I may buy one or two in the future (Jacqueline Kennedy?), but I’ve decided to opt out of the full series.

As a result, I’ll be selling the first five off at a rate of one a week.

I think I’m going to steer clear of the more trendy, obvious collector-bait series going forward.  Yes, Native American $1 Dollar Coins, I am talking to you.  Of course, I am a sucker for truly beautiful new efforts.

Just remember, all bids on eBay are binding.  And you must bid from a PayPal account with a confirmed address.

PayPal Micropayments: A Step in the Right Direction

Paypal quietly launched it’s PayPal Micropayments service level this week, and it’s definitely a step in the right direction.  It’s a service that has been in testing and research for quite some time, but it’s nice to see it finally launched publicly.

Here is the new PayPal Micropayments site, which explains the terms.

For those of you unfamiliar with PayPal economics, PayPal charges a fixed fee and a variable rate on every transaction for premium customers.  A premium customer, by the way, is basically anyone who wants to receive more than $500 a month and/or accept credit cards.

The payment scheme is similar to the credit card companies, although of course PayPal charges the same fee for bank & debit payments too.  They even charge the fee on PayPal balance purchases.  There is a reason why PayPal is a phenomenal business in its current form.

The problem is that for low cost items, the PayPal fixed fee can be expensive.  The fees for a basic premium account are:

$0.30 + 2.9% of the transaction.

So, if you are selling a $100 item, your fees would come to:

$0.30 + $2.90 = $3.20, or 3.2% of the transaction.

Not a huge fee, but certainly a significant line item for normally thin retail margins.

Now look at the cost for a $5 item:

$0.30 + $0.145 = $0.45 (rounded), or 9% of the transaction.

Wow.  9% for payment processing.  Hard to build a great business there.

The micropayments service offering fixes this, by lowering the fixed fee, and raising the variable fee.  The new fee structure is:

$0.05 + 5% of the transaction.

So, that same $5 payment now costs:

$0.05 + $0.25 = $0.30, or 6% of the transaction.

6% is still high, but much, much better than the old fees.

Of course, given the scalability & cost issues with PayPal infrastructure, the launch is typically limited in terms of implementation:

  • You can’t really find this on the site, you have to go to the magic micro-site to sign up.
  • You have to sign up for this fee structure separately.  You can have the micropayment structure, or the normal structure, not both on a single account.
  • You have to wait 2 days for the fee structure to take effect.

This means that as an e-commerce seller, you have to keep two accounts open – one for your items over $12, and one for the rest of what you sell.  It also means you have to juggle the fact that PayPal doesn’t like to see two accounts linked to the same bank account, credit card, or email address.

Still, it was fairly trivial for me to set up a new email address on my personal domain, and get the new account.  I’ll start using it immediately on Media items, like used DVDs, that tend to get below $10 prices.

If I was in the eBay selling tool business, I would definitely build in a feature to automatically assign the right PayPal account to listings based on the fixed price or expected final value of an auction.  It probably wouldn’t take more than a day or two to implement.  An eBay seller with $100,000 GMV per year, with 50% of items below $10 could likely save thousands of dollars with this technique – that’s margin that is worth taking.

I’m not sure this fee structure will get PayPal into the true micropayments arena.  If they want to be collecting payments under $1, they will really need a fee structure that operates on the aggregate – grouping together charges like they do for iTunes to minimize charges.  Still, I’m glad to see them make at least this small step forward.  It must not have been easy to face the potential cannibalization for existing sellers who are using PayPal today on eBay for under $10 items and who will move to this payment structure.

What would be great is a true wrap account from PayPal that would mix together a true micro-payment pricing (sub-$1), low price item band (sub-$10), and regular merchant fees, with PayPal handling all the aggregation and management to deliver payments for a broad product line at a fixed rate based on monthly volume.

Still, I’m sure there are a few people at PayPal who slaved over this recently, and I do want to say to them thank you for shipping it.  I’m hoping this will help make selling lower price items viable again for me.

Marc Andreessen Joins eBay Board of Directors

This is literally yesterday’s news, but was worth a mention here.  From the eBay Ink blog:

Marc Andreessen has joined eBay’s board of directors, effective immediately.

Andreessen is most noted for co-founding Opsware and Netscape, and served as AOL’s CTO immediately following its acquisition of Netscape. His current venture is Ning, a new consumer Internet company founded in 2004 that is focused on building a next-gen platform for social networking. Rather than having its users join one all-encompassing social network, Ning encourages and allows users to create their own social networks for anything they’re passionate about. In four years, more than 480,000 social networks have been created by users on Ning.

I had a chance to meet Marc briefly as part of the OpenSocial launch @ Google last year.  There is no question in my mind that eBay will benefit from having his perspective on the board given their current challenges.

Some interesting facts & links:

In particular, I’m going to flag a post I wrote over a year ago about how eBay missed its opportunity to buy Ning cheaply, and why that acquisition would have made sense.  I caught some flack for that last summer… feeling at least partially vindicated here.

Welcome to World of Good

Seema may be a pretty miserable blogger, but she’s a great product manager.  And her site just went live last week.

Congratulations to the team, and welcome worldofgood.com.

World of Good is an attempt to produce the first, global-scale marketplace for socially beneficial goods.   Yes, when you shop the site you will see badges for:

  • Eco-Friendly
  • People Positive
  • Animal Friendly
  • Supports a Cause

It’s a nice initiative because it combines some of the raw, positive economics from aggregating demand for these poorly distributed goods, allowing many of the vendors to reach buyers they otherwise would be unable to find.  It’s a classic eBay play to try and make an inefficient market more efficient.

I’m not sure of the overall business opportunity here for eBay, but it’s great to see this two-year effort pay off for Seema and the team.  Congratulations.

Goodbye, Bid-O-Matic

A few weeks ago, I wrote a Eulogy to eBay Express here on this blog, and it rapidly became one of my most popular posts ever.  (Of course, nothing quite competes with the Battlestar Galactica posts, but I digress…)

Last week, eBay quietly announced the death of Bid Assistant, a product concept that I remember fondly from my days at eBay, and I thought it would be worth a few minutes to reflect back on lessons from the life span of that effort.  The truth is, while eBay gets a lot of press coverage from both the traditional media and from bloggers, I see very little, if any, actual detailed discussion of the features themselves, whether good, bad or ugly.  Usually, you just see factual reports, like this.

Bid-O-Matic, the original concept behind Bid Assistant, is an idea that goes back to at least 2005, if not earlier.  The problem it was attempting to solve is pretty much as old as auction bidding on eBay:

  • As a buyer, you often find several auctions for the item you are looking to buy, at various stages of completion.
  • If you bid on only one auction, the price of that auction might go too high, and you might have missed out on one of the other auctions.
  • If you bid on more than one auction, then you run the risk of winning more than one item.

eBay, of course, frowns on retracting bids, let alone backing out of a completed winning bid, so it’s a difficult situation to handle.  If you talked to any of the regular auction buyers on eBay, they would give you a personal story relating to this problem.  Try bidding on a digital camera some time, and you’ll feel the issue pretty quickly.

Enter Bid-O-Matic.

Bid-O-Matic was supposed to be the first step in building a true eBay assistant for bidding.  You, as a buyer, would pick out a list of equivalent items to bid on.  Bid-O-Matic would then place bids for you, attempting to win exactly one of the items at the lowest possible price.

That was the idea, anyway.  Like many great product ideas, it had its roots in a real customer problem;  a customer problem expressed in earnest by some of eBay’s best customers, it’s regular auction buyers.  And it was a classic case where technology could dramatically improve the customer experience.

And like many a road to hell, it was paved with good intentions.

Bid-O-Matic originally failed to get traction within the company, largely because the cost of building the feature did not seem to justify the incremental improvement to the eBay business.  The problem mathematically is that frequent auction buyers actually already buy a lot, so it was hard to see how this tool would really help them buy that much more.  In addition, the problem is unique enough to advanced users that it was hard to imagine that many auction buyers who weren’t regular buyers adopting the tool.

Bid-O-Matic stayed just a concept, until renewed focus on improving the auction experience really took hold in 2006 as part of the “eBay 3.0″ concept.  Bid-O-Matic seemed like the perfect example of a feature that eBay’s best auction buyers would love, and so despite the numbers, the feature was given the green light.

Without going into too much gory detail, after much pain, schedule changes, cost increases, design compromises, and a typically horrific naming process, Bid Assistant was born.

While I was a huge fan of the initial concept, and of the people who worked on it, as a user I was never really able to engage with Bid Assistant.  It required a fairly arcane knowledge of “Watching”, the eBay process for bookmarking auctions.  The integration points were also fairly tortured – there was very little in the actual Finding and Buying experiences to lead you to discover the Bid Assistant.  Worse, I think fixed price listings severely limited the potential benefit of the feature.  Bid-O-Matic was never useful for multiple, unique, one-of-a-kind collectibles.  And if you are buying a commodity item, like a specific model of digital camera, then just buying it on eBay Express (or Shopping.com or Amazon.com) made much more sense.

Like all Product professionals, features like Bid-O-Matic leave me torn.  On the one hand, I want to say that there was a real user problem here, and that with the right research, design inspiration, and iteration, eBay could have come up with a great product here.  On the other hand, that time and effort is expensive, and there are likely much more important problems eBay could be putting that effort towards.

In any case, I just want to say goodbye to the Bid Assistant, and a brief acknowledgement to the team that built it.  Better to have tried and failed than to never have tried at all.

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