Friday, April 18th, 2008

John Donahoe talks to eBay Ink

Two weeks ago, John and Pierre conducted a live webcast to the entire organization that emphasized a need for open communication and what can only be described as bold steps for the company (I’m working on getting video excerpts of the conversation to share with Ink subscribers soon).

Before they sat down together, I was able to get a few minutes with John on my own in which he shared a lot of the same themes that came up in his discussion with Pierre. I had hoped to share this with Ink readers sooner than now but with the quiet period in place heading into earnings, I was unable to do so.

Before we jump into the original conversation, however, I wanted to make sure I addressed a timely and critical discussion that has been given more fuel by a Financial Times story, that ran on the heels of the earnings news this week, that I felt needed clarification directly from John. So, the first question and answer below is from earlier today. The rest is the transcript of my conversation with him on March 21. I plan on sitting down with Skype president, Josh Silverman, in the coming weeks to get his take on the future. For now, here is my conversation with John.

April 16, 2008

Q. I read in the Financial Times that we may sell Skype. That if the synergies are strong, we’ll keep it in our portfolio. If not, we’ll reassess it. Is this true?

We have no plans to sell Skype… and why would we? As I said in the story, it’s a great business with a great purpose — enabling the world’s conversations. With a new president, our plan for Skype is to focus on providing the best possible user experience and continuing the incredible growth momentum we’ve enjoyed with Skype for the past four years.

To be clear, I’ve fully supported big investments in Skype, including removing the earn-out, and bringing over some top talent like Josh. I think this business has tremendous potential that we’ve only started to tap. Josh and I are both excited about the prospects … our job now is to make sure we continue to build on Skype’s successes and grow its passionate community of users.

March 21, 2008

Q. Thanks for taking the time today. I’m going to jump right in by addressing the marketplace. There’s been a lot of talk about how you look at the business. Some of our users have even claimed that you don’t like the marketplace. What do you say to that?

I love the marketplace. I love the purpose, mission and values that underlie eBay. It’s why I left a really good job to join this company. I have enjoyed getting to know our community, this business, and the employees over the last three years. And yes, I love the marketplace! Let me share a story with you: I spent New Year’s in Australia visiting an old friend of mine – a music lover – and I wanted to send him a thank you gift. I went and found the entire collection of KFOG – Live at the Archives on eBay. There’s no place else in the world where I could get a collection like that so easily – I got volume 4 - 14. I went back and forth with several sellers – building the collection. And then I found a seller who had a set but had already sold it. I asked him where I could get another one (for myself) so in the end I was able to send one to my friend and get one for myself. That kind of interaction never ceases to excite me. The seller has since emailed me and asked me if I had listened to song 4 on collection 6 … to me, that is eBay.

So, I love the marketplace and I love our purpose and mission. More than anything, I feel a huge sense of responsibility to maintain the vibrancy and the relevance of eBay in today’s ecommerce environment … and in tomorrow’s. And that to me is the biggest challenge.

Q. Speaking of challenges that you face; specifically as the new CEO on the block, Meg said in her internal memo to employees “It’s time for eBay, and this community, to have a new leadership team, a new perspective, and a new vision.” How does your vision differ from Meg’s?

The world is changing and it’s a different time from when eBay was born. There are different formats and platforms that sellers can sell on. There are different websites that buyers can buy on. I view my biggest priority and challenge is to ensure that we bring the very best of what eBay has represented over the years. This means giving buyers great value and selection and giving sellers a great opportunity to sell at unparalleled volumes and to bring eBay into today’s world and tomorrow’s. So that buyers say “eBay is the best place to find value and selection and I will continue to come back” and so that sellers are able to sell and make a living which in turn fuels eBay’s success.

Q. You continue to reference challenges and you’ve also been quoted as being aggressive when facing those challenges. In the January earnings call, for example, you said that “we’re going to get very aggressive about making eBay easier and safer to use”. Can you elaborate on how you actually see us being aggressive? Provide specific examples?

We have to confront some sacred cows. Our guiding principle is what is best for our marketplace? What is good for the buyer? At the end of the day we need buyers and what has distinguished eBay from the beginning is the extraordinary traffic. We’ve done a lot of research on buyers and we know what turns them off. Our best buyers are telling us that they’re having too many bad experiences and that is unacceptable.

Q. What kind of bad experiences?

A big issue is excessive shipping charges. A second is that the item is not as described. A third is item not received. A fourth example, which is particularly infuriating, is when a buyer receives retaliatory negative feedback. Our most active buyers have told us that this was among their primary reasons for buying less on eBay. But we’re doing our part to make it better. For example, we’re focusing on providing better customer support and protections for our buyers when they have a bad experience. Our number one goal is to ensure that our marketplace provides the best experience for buyers so that they come back.

Q. What about the seller experience?

On the sellers’ side we heard a lot of feedback, too. Sellers came to us and said a number of things, including that incentives aren’t aligned enough … that they were absorbing too much of the risk with insertion fees … that they wanted to list at higher volumes and create listings more easily. They also told us they wanted to get a gauge of where they stand in terms of performance.

The new pricing that we’re rolling out is directly in response to this feedback. The seller dashboard that we’re rolling out in May is in direct response to that. We’re making improvements to our tools for casual sellers. For example, we instituted a process that has cut down the listing time by a third. And for larger sellers, we’re doing a number of things that will make their experience on eBay much easier. We’re determined to be the healthiest and most vibrant marketplace today for both buyers and sellers.

Q. Taking a step back from the Marketplace – looking at eBay Inc., the big picture. We have a lot of irons in a lot of fires… what is it that keeps you up at night?

It’s having the courage to stay with what is right for our customers, even when there is controversy around it. I really care a lot about listening to the community. I care a lot about being customer focused. But I also recognize that there are 80 million different opinions out there and it’s tough not to be paralyzed by that many different beliefs on where we should go as a company.

I feel that our user experience didn’t keep pace for a number of years, partly because we were trying to please all of the people, all of the time … we became less decisive in making changes that we had to make. Now we need to have clarity and conviction to acknowledge what needs to be done – and then do it.

For example, we instituted detailed seller ratings last year, which caused a lot of controversy in the community. But we know they’re working – both buyers and sellers are telling us that. At the end of the day, we must have the courage to do what’s best for the marketplace.

That’s not to say we won’t make corrections where needed. For example, we announced changes to pricing across the board at the eCommerce Forum, but heard from some sellers that the structure didn’t suit certain categories very well. So, we went back and changed pricing for media, such as books, CDs and DVDs.

We are going to be much more balanced moving forward in terms of being responsive, yet sticking with our conviction.

Q. Any advice to the new guy?

Listen and have passion. Our goal is not to be a finely tuned, smooth, perfect machine. The minute our community stops talking is the minute I worry. Because their opinions, constructive criticism or praise, stem from passion. People are basically good – that is our belief. And we will not shut our ears to what people have to say – we will embrace it.

Tagged: ceo, ebay, eBay Ink, ebay interview, ecommerce, executive profile, interview, john+donahoe, Marketplace, online marketplace, paypal, q&a, skype

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