eBay 10 Years - 1997

The Year that Was: 1997

"Let me get this right: people are going to buy and sell antiques online. I gotta go."

Silicon Valley venture capitalist

If 1996 was the year that AuctionWeb officially became a business, then 1997 was the year when the young, bustling operation began to build the foundations for future growth and viability. In the year when the Beanie Baby craze reach new heights, the world said goodbye to Princess Diana, and millions stood in long theater lines to see Titanic, Pierre Omidyar, Jeff Skoll, and their small but growing staff were making decisions that would affect their enterprise for years to come. By the end of the year, the company had transformed itself yet again. Now, it had 41 employees, 341,000 registered users, venture capital funding, a scalable new IT architecture, and, yes, even a new name. The year also marked another major milestone—the one-millionth item, a Big Bird Jack-in-the-box toy, was sold. With all the changes AuctionWeb was experiencing, the one constant was almost surreal growth. During 1996, the total amount of the merchandise sold on the system was $7.2 million. A year later, it was $95 million—an increase of roughly 13 times. This inspired people to call the period the time of the "Great eBay Flood." And one of the key contributing factors was those lovable Beanie Babies. AuctionWeb became a great resource for people who just couldn't live without Legs the Frog, Chocolate the Moose, and their animal friends. And, in May 1997, $500,000 worth of these cuddly creatures were sold through the site—an incredible 6.6 percent of the site's total volume for the month. Along with growing revenues, some major challenges were also flowing along in the Great eBay Flood. One glaring item on the "to-do" list was to gain credibility in the venture capital community. After Jeff finished a business plan, which included AuctionWeb's "principles," he and Pierre began to seek out the funding they believed would be instrumental in eventually making their initial public offering (IPO). Despite all the growth they had experienced, there was still skepticism. Jeff remembers one respected venture capitalist telling him: "Let me get this right: people are going to buy and sell antiques online. I gotta go." In June, however, AuctionWeb received its funding—$5 million from Benchmark Capital for 21.5 percent of the company. Four years later, that $5 million would be worth more than $4 billion, making it one of the best investments of all time. Another big challenge was developing a system architecture that could accommodate the organization's growth. To "build our next generation from scratch," as Pierre put it, he brought in Mike Wilson, a whimsical computer guru he had once worked with. Quickly winning the community over with his blunt no-nonsense communications and personal quirks (he named each of the network's servers after a reptile), Mike led the effort that created the new system and launched it on September 1, just in time for AuctionWeb's second birthday. As AuctionWeb retired its old IT system on September 1, it also retired its name and—paradoxically—began to actively promote an identity it had had all along. Back in 1995, Pierre had wanted to name his own Web site www.echobay.com. This had nothing to do with Echo Bay , the small community in Nevada ; he just liked the sound of it. When he found that www.echobay.com was taken, he claimed www.eBay.com. AuctionWeb was one of the three different services that could be accessed from this site, and—when referring to the auction service—community members often used “eBay” or both names interchangeably. To clarify the situation—and cement the brand in people's minds—the shorter, catchier eBay was chosen.