Tech-Trivia : Did You Know? This Week in Tech-History …

28 Years Ago : eBay (& Amazon by Comparison)

Whilst eBay’s market cap is dwarfed by that of Amazon (i.e. circa 24 billion dollars compared to circa 1.4 trillion dollars), it’s easy to forget eBay helped shape online purchasing too.

Before it was rebranded as eBay in 1997, the site was originally called AuctionWeb. Founded by Pierre Omidyar in 1995, it was an experiment to create an online venue for person-to-person auctions and lacked any heavy investment. In fact, the hosting company were just charging thirty dollars per month to for the entire website when he started up, until they said they’d no longer host it for that price due to the growth in traffic, thereby forcing him to monetise his website via his sellers, which worked.

With his degree in computer science behind him and having worked in a subsidiary company of Apple, he was also working on various other web projects. He’d also co-founded another company called Ink Development, a company initially focused on developing software for pen-based computing. The company transformed its direction and became an e-commerce platform named eShop, which was later acquired by Microsoft in 1996.

In short, Pierre was the right person in the right place at the right time. And so was Elon Musk (more on him later).

The Unexpected First Listing

The first item ever listed on AuctionWeb was a laser pointer. To be more precise, it was a broken laser pointer. This wasn’t a mistake or an oversight. Omidyar had bought it for his own use but found out it was faulty. Rather than discarding it, he decided it would make an interesting first listing on his experimental auction site. He listed it clearly mentioning it was non-functional. To his astonishment, the laser pointer garnered bids and finally sold for $14.83.

Intrigued by someone paying for a known broken item, Pierre out to the buyer who simply responded that he was a collector of broken laser pointers. This quirky initial transaction showed the potential of a vast, unpredictable, and diverse online marketplace.

The Beanie Baby Phenomenon

While the broken laser pointer was AuctionWeb’s first sale, it was the Beanie Baby craze in the mid-90s that truly skyrocketed the platform’s popularity. Beanie Babies, those small plush animals filled with plastic pellets, became a massive collector’s item. AuctionWeb became a primary marketplace for these avid collectors, providing them a platform to buy, sell, and trade these toys.

The Beanie Baby phenomenon showcased the strength of the platform in bringing together niche audiences globally and the success also signalled the beginning of a new era where the average person could become an entrepreneur from the comfort of their own home.

From AuctionWeb to eBay

Seeing the growing potential, Omidyar soon renamed AuctionWeb to “eBay,” which was short for Echo Bay, the name of Omidyar’s consulting firm. The rest is history! eBay went public on September 24, 1998.

On its first day of trading, the stock’s price of $53.50 soared well past the initial target of $18, emphasising the optimism investors held during the dot-com boom. Unlike many that fell by the wayside, eBay is now a business that operates in over 30 countries with a market cap peaking at 80.6 billion dollars.

Amazon and eBay – Different Approaches.

While eBay and Amazon both started as online marketplaces in the 1990s, they evolved with different business models and strategies that have influenced their trajectories. eBay started off as an online auction place, although plenty of people and businesses sell via their ‘Buy Now’ function as an online shop.

There are many possibilities as to why eBay hasn’t reached the same magnitude as Amazon and here are a few :

  1. Business Model: eBay began as a peer-to-peer auction site, allowing individual sellers and buyers to negotiate prices. This gave eBay a unique identity but also meant slower and less predictable transactions. Amazon, on the other hand, started as a book retailer and then expanded its product range, focusing on selling new products at fixed prices.
  2. Fulfilment and Logistics: Amazon invested heavily in fulfilment-centres and logistics, creating a vast and efficient infrastructure for storage, packing, and shipping. This allowed them to ensure rapid delivery, leading to services like Amazon Prime. eBay, on the other hand, relies on individual sellers to handle shipping and logistics, which can be more variable in terms of speed and reliability.
  3. Private Label & Product Expansion: Amazon developed its own private-label products and expanded into diverse categories. They also encouraged third-party sellers to use their platform, ensuring a vast product range.
  4. Ecosystem Development: Amazon diversified its business areas, venturing into hardware (Kindle, Echo), streaming (Amazon Prime Video), cloud services (AWS), and more. This diversification created multiple revenue streams and bolstered its market presence.
  5. Trust and Reliability: Amazon’s emphasis on customer service and consistent delivery times built significant trust with customers. While eBay has made efforts to ensure product authenticity and seller reliability, the peer-to-peer model sometimes leads to inconsistencies in product quality and delivery.
  6. Global Expansion Strategy: Both companies pursued international expansion, but Amazon’s aggressive strategy of setting up localized versions of its site, fulfilment centres, and tailored services for different countries gave it a strong global footprint.
  7. Subscription Model: Amazon Prime, a subscription-based service, not only offers faster delivery but also includes streaming, exclusive deals, and other perks. This has fostered customer loyalty and increased purchase frequency.
  8. Feedback System: While eBay’s feedback system was innovative and built trust in the early days, some argue that it’s become less effective over time due to potential biases and reluctance from buyers and sellers to leave negative feedback.
  9. Acquisitions and Divestitures: While both companies made acquisitions, their strategies differed. Amazon’s acquisitions like Zappos, Whole Foods, and Twitch were integrated into its ecosystem. eBay, on the other hand, made some large acquisitions, such as Skype (see below), which were later divested as they didn’t align with eBay’s core focus.

What can be seen is that eBay seems to have plateaued insofar as the gross merchandise volume (GMV) (i.e. the total amount of ‘stuff’ sold via the platform) is concerned whereas Amazon’s GMV is steadily rising and so is the share of that GMV being sold by third party sellers (rather than Amazon directly) so doubtless they’re eating some of eBay’s lunch.

Perhaps the different share prices reflect the differing optimism because if there’s one thing that investors like, it’s growth.. One thing that’s clear … both companies did well over the pandemic.

While eBay didn’t reach the same dizzying heights of Amazon, it’s nevertheless a true rags-to-riches success-story that’s worth studying, including a couple of their better-known acquisitions. Even if the acquisitions were later sold, it’s interesting to try and appreciate the thinking behind the strategy and synergy.

Payment Provider : X Marks The Spot

The X Factor Elon Musk’s wealth originated from a critical acquisition made by eBay in 2002. In the late 1990s, Musk co-founded, an online payment company. would later become known as PayPal after a series of developments and a merger.

It was this very company, PayPal, that eBay acquired in 2002 for $1.5 billion in stock. At the time of the acquisition, Musk held 11.7% of PayPal shares, translating to roughly $165 million from the sale. Not too shabby for Mr Musk and it certainly helped springboard his wealth to be in the same league as that of Jeff Bezos from Amazon.

Communications Considerations : Skype

In late 2009, eBay finalized the sale of Skype for an impressive $2.75 billion. This strategic move allowed eBay to refocus on its core e-commerce operations, while the deal also highlighted Skype’s significant growth and potential in the telecommunications sector.

The Future?

Whilst Amazon seems intent on taking over the world by expanding relentlessly into eBay’s territory (and many others), eBay will likely remain a trusted corner-of-the-web for people to buy and sell goods for many years to come.

All of which started 28 years ago (this week), with a good idea and a broken laser-pointer.

Tech-Trivia : Did You Know? This Week in Tech-History …

Ancient Data-Disasters

So far in 2023, Canada’s had wildfires devouring over 30 million acres, an expanse comparable to Kentucky. This has already surpassed Canada’s earlier record set in 1989, where flames ravaged more than 18 million acres.

As the wildfire-season isn’t over yet, using the 1989 figures (much less than 2023) 18 million acres could yield in the order of 18 billion trees, assuming a thousand trees per acre. A typical pine tree, measuring approximately 45 feet in usable trunk length and eight inches in diameter, is believed to yield about 10,000 sheets of A4 paper, i.e., the 1989 Canadian wildfires possibly burned around 180 trillion sheets of A4 paper – enough to cover up the whole of Europe or stock the ancient Library of Alexandria 30 billion times over! The exact number of scrolls the Library of Alexandria contained isn’t definitively known and varies across historical sources, so it was assumed the library held 500,000 scrolls (estimates can range anywhere from 40,000 to over a million). It was also assumed that one scroll is equivalent to 10 sheets of A4 paper, for simplicity.

When the ancient Library of Alexandria was burned down (the second time), it wasn’t due to climate change but because Julius Caesar fancied Cleopatra and when he became involved in the internal conflict between her and Ptolemy XIII, he ignited the ships at the port of Alexandria and it’s speculated that this blaze extended to the library, leading to its total devastation.

It wasn’t the only time a Roman leader burned down the library because another section of the library was housed within a temple devoted to the deity Serapis. In 391 CE, under the edict of Roman Emperor Theodosius, Christianity was proclaimed the sole permitted religion of Rome, leading to the demolition of all pagan temples. Consequently, the Serapis temple in Alexandria was razed, resulting in the loss of the library’s secondary branch (talk about single-minded).

It’s believed by historians that the Library of Alexandria once contained more than half a million documents sourced from regions like Assyria, Greece, Persia, Egypt, India, among others. While gauging the storage for images remains challenging, the textual contents of this vast library could feasibly fit on a 16Gb USB drive.

Whilst this ancient information-storage is impressive, it pales into insignificance when compared to the amount of worldwide information being produced daily. This amount of information is growing geometrically and inexorably as this page and image (c/o Statistica) shows :

The next time you see a humble USB-stick, consider all the trees/wood/paper/books it could back-up and spare a thought for how the ancient librarians must have felt after the fires without an effective disaster-recovery policy!

Tech-Trivia : Did You Know? This Week in Tech-History …

“This Message Sent Around The World”

At 7:00 p.m. on August 20, 1911, a commercial telegram was sent by the telegraph operator at the Times, working on the seventeenth level of the newspaper’s headquarters in Times Square. The message made a westward journey from New York, and shortly afterwards, the very same operator received his transmitted message back, having arrived back to him eastwards.

The New York Times had wanted to find out how long a commercial telegram would take to travel around the world, so they tried it!

The message simply said “This message sent around the world.”   And it did indeed go around the world … in just sixteen and a half minutes!

Not bad, but that was a commercial telegram and therefore it wasn’t sent with all the priority that could potentially be mustered.
That honour went to President Roosevelt years before back in 1903 on July 4th (Independence Day) when his absolutely-top-priority message travelled around the world in just nine and a half minutes.
By way of comparison, that’s faster than it’d take to parcel-up your message, instruct a driver, team-up (& feed) some horses and get a mail-coach out of the yard and onto the road!

Talking of horses, the Pony Express became immediately obsolete and ceased trading just two days after the first trans-continental telegraph was sent many years earlier, during the American Civil war. Of course, sending a telegram in those early days was wildly expensive (a relatively short-distance telegram could likely cost $100 for a modern Twitter-equivalent message.

With the rate of pace of change these days, it’s easy to forget that technological progress even 150 years ago was still pretty awesome. For example, the 98-letter message sent from Queen Victoria to the US President Buchanan (in Pennsylvania, US) was very difficult to decipher and took 16 hours to send. It was nevertheless revolutionary to send electronic communications across vast oceans in 1858 and so the novelty of her message meant it was followed by a hundred-gun salute, street-parades, church-bell ringing and all other sorts of other excitement across the land.

Perhaps take a moment a think about that next time you send an encrypted video-message via WhatsApp to a friend back home whilst you’re abroad on your holidays!