eBay Archive

The popular German blog Basic Thinking will be put up for auction on eBay over the coming week. You can read the translated version of the blog post here. Basic Thinking is run by Robert Basic and is part of his blog network. The other blogs in his network will not be sold at this time. Basic is looking for between 10,000 and 100,000 Euros for the domain, the blog and the logo.

Basic notes that the email addresses of those who have commented on his blog will be removed. I think that’s a really interesting point – when a blog or community is sold, what access does the new owner have to the current users. I am sure most large communities discuss acquisitions in their TOS but what about blogs?

Basic Thinking shows approximately 25,000 RSS subscribers via their FeedBurner chicklet (you know what I think of these numbers). While the number may or may not be real, there is a good deal of commenting activity which shows an active community. One of the most popular discussions I have regarding blog acquisitions is whether the community will remain around once the blogger/personality leaves the site.

I have heard a small bit of chatter that this might be a linkbait stunt. Spiegel Online has more information about the upcoming auction.

Online auction provider eBay has announced that they have acquired Bill Me Later for $820 million in cash plus approximately $125 million worth of outstanding options. The deal is expected to close by year-end.

eBay notes that today’s acquisition will be a good complement to PayPal. “Bill Me Later is a perfect complement to our portfolio; PayPal and Bill Me Later belong together,” said John Donahoe, eBay Inc.’s president and chief executive officer. “We now have a powerful combination of the two leading, complementary online payment products, each with proven benefits for consumers and online merchants. At an attractive valuation, our investment in Bill Me Later opens significant long-term growth opportunities."

Bill Me Later will run as a business unit of Paypal and Bill Me Later CEO Gary Marino will report to PayPal president Scott Thompson.

From the release: eBay anticipates that Bill Me Later will generate an estimated $150 million in revenue in 2009.

There is a conference call scheduled for 8:30AM and we will update this post with comments from the call.

Conference Call Notes:

John Donahoe says they want to focus this year on the following 3 things:

1. make ebay easier to use
2. improve product selection
3. improve paypal’s leadership both on and off ebay

We are reducing our workforce by 10% or by about 1,000 total workers. It will impact most parts of the company. We are creating efficiency while investing where needed.

John discusses the acquisitions of DBA from Denmark. He notes they own 25% of Craigslist. If you add up all of the sites that are in the eBay network, they have more traffic than Craigslist.

PayPal has a strong and growing penetration on eBay. Growth on eBay has led to growth off of eBay – one million merchants off eBay use PayPal. They focus on large merchants – 35 of the top 100 online merchants offer PayPal. 63 million consumers use Paypal. This quarter Paypal volume off ebay will be larger than on ebay.

BML (bill me later) and paypal belong together. we know the company and their unique capabilities – now is the right time to combine both companies. Bill me later is the number 2 online payments company. Bill Me Later brings 3 strengths to paypal:

1. a complementary merchant base to paypal
2. bml delivers a compelling consumer value proposal
3. bml helps paypal leverage its distinct business advantage – lower costs

We now have the #1 and #2 online payment brands. They believe that even with the market conditions, they believe this is the right time to bring the companies together.

Gary Marino, Bill Me Later CEO now speaking:

The more we spoke with paypal, the more we saw similar goals. He explains how bml works. They have a lot of risk models and can figure out if the sale should proceed in under 3 seconds. The appeal of BML is how easy to use – consumers like it apparently when they are in a rush.

BML typically sees double shopping cart size when using the BML checkout option.

They have re-engineered the credit model – they do not issue credit lines- they authorize sales one at a time.

Scott Thompson – Paypal President now speaking:

Bill Me Later is a lot like Paypal and that’s why it makes sense to come together. Discusses how BML has mostly larger merchants while PP has mostly ebay shoppers. Shoppers have more choice online now.

BML will help lower the overall transaction costs for Paypal. Paypal is available on 25% of all transactions on the internet.

Clearly their goal is to grab as much of the larger volume and transaction sites based on this call.

The acquisitions total 1.3 billion.

Stronger dollar has been a challenge for the company – more details on their earnings call next week.

Q&A:

• Bill Me Later will become part of PayPal. Gary is incented to stay. BML team is excited about the deal
• Expects BML to be on eBay by early 2009
• Paypal has 150 million accounts, 64 million are active
• valuation for bml less than half what it would have been a year ago
• biggest line item of cost for Paypal is transaction expense
• in 2009, bml and pp will interlink accounts with goal to have one signup process
• Skypte is 6% of total business

call has concluded.

comScore is out with their German search engine rankings for May 2008. Google picked up another 1.5% share from the previous month, moving them to just over 80% of the German search engine market. That’s a staggering number. eBay is the second most popular search engine in Germany, however they lost .5% share for the month, coming in at 6% overall.

German networks Verlagsgruppe Georg von Holtzbrinck and ProSiebenSat1 Sites own 4.6% share combined.

It’s interesting to compare the numbers to the Russian search engine comScore report. In Russia, local search provider Yandex owns nearly 50% of the search market.

Picture this: you get up early on Saturday morning and head down to the local swap meet where 100 sellers are there, each one is selling the same items. Normally you need to walk around from seller to seller and attempt to discuss a deal with them. Eventually one seller will match your price and you purchase the item. This is what a company launching today is attempting to do online, only easier. Wigix is looking to line up sellers based on the products they are attempting to sell so you can easily see what’s available and then negotiate with the sellers directly if you aren’t happy with the price they are offering.

The company is calling themselves, "the world’s first online stock market for all non-financial goods." I see it more like Amazon’s third-party sales with negotiation. They are going directly after eBay which can be a mess when you are looking for an item. Wigix also has a different pricing structure than eBay which currently charges listing and final value fees. Wigix will charge a flat-rate fee per item. On Wigix the buyer will pay a fee along with the seller.

The idea of an organized eBay is one that I like. It’s a mess right now – especially with the spam listings. The one question I’d have is how they will deal with accessories. Let’s say you want to sell your iPhone plus 5 accessories. It’s easy to highlight those extras and charge accordingly on eBay – will it be that easy to differentiate the individual products and those with accessories online?

The bottom-line with Wigix is whether they will be able to get enough buyers and sellers to move over their inventories from ebay (and other auction sites) to Wigix. Many heavy sellers have enormous switching costs due to the feedback profiles on eBay and the easy Paypal integration. Also, calling this marketplace a "stock market" will scare away average buyers and sellers I believe. Not sure why they went with this marketing message but there appear to be others that would work better.

Stacey from GigaOm seems to agree with me that calling Wigix a "stock market" is a mistake. Mark Hendrickson suggests that Wigix will bring order to online trading.

Valleywag posted a tip last night on the launch of the new eBay Partner Network. This morning, eBay (EBAY) has issued a press release about the new affiliate network. Note the use of the word "partner" instead of the word "affiliate". This is to help embrace the millions of sites that drive traffic and sales to eBay.

Only eBay and Half.com (they still exist?) are affected. eBay’s other businesses including StubHub will remain with current affiliate provider Commission Junction. The eBay Affiliate Program claims more than 100,000 members globally. Current affiliates have until May 1, 2008 to convert to the new Partner Network. There is information about the transition on the eBay affiliate site.

There are many services that leverage the CJ affiliate programs for their own affiliate programs. ShoppingAds (a CN sponsor) is one of those companies. I assume that each of these super-affiliates will need to get cranking on the rework to utilize the eBay Partner Network to minimize any potential customer downtime.

It used to be that in the tech entrepreneurial culture, geeks were not prized, particularly in leadership. They were the folks that made the product, but they could not drive your business. You needed an MBA. Or a sales guy. The geeks were little more than the factory.

And I think, among many VCs, that is still the thinking. The strategy is to push the technical founder out of the way and make room for the *real* business people. But an interesting thing is happening in the marketplace. The customers are thinking different. If you look at the companies that are succeeding in the marketplace, the one thing that most of them have is geek cred. They are generally led by a tech focused leader, or the organizational DNA of the company is inherently technical.

This is because the Internet is an incredible truth filter. No slick-haired glad hander, or glossy marketing plan is going to convince a customer that a product that isn’t good really is. Because the geeks will figure it out. Geeks have power now. Email travels everywhere. Blogs are public and easily accessible. Regardless of where they are in an organization, truthful, perspectives can be heard. And so there is less friction preventing the good stuff from emerging. On the other hand, bad stuff is more often than not, smashed instantly. In other words, it is no longer possible to hide bulls**t with a coating of sugar.

If you look at the major Internet properties/companies today, we can draw an almost direct correlation between geek cred, and whether they are on their way up or down. While this is not an absolute because obviously companies can have good runs without any real technology, it is interesting to explore the correlation between geek cred and current success. Below is a review of some of the major companies geek cred factors, on a 1 – 10 scale. Yes there are a few zeros. This is not a mistake.

Have Geek Cred

Amazon / geek cred: 9
Amazon was always considered smart because they made collaborative filtering work, though their geek cred has skyrocketed in the last year as a result of Amazon Web Services (EC2,S3,etc.)

Google / geek cred: 10
Duh.

FaceBook / geek cred: 7
Facebook is led by a programmer. For this reason Facebook’s DNA is inherently programmerish. Releasing the Facebook API solidified that positioning, and exposed it to thousands of programmers. Also, Facebook is putting cool technology out into the open source. We geeks love that.

Apple / geek cred: 10
This is obvious, but Apple is the only real thought leader in consumer devices and computers. Now that their OS is Unix based, Apple has even more geek cred.

HP / geek cred: 8
HP has a geek culture that goes back to its founding, and its history as a maker of testing instruments and RPN calculators. Today, they are in the PC industry, and while they are certainly not thought leaders in that category (because there are none other than Apple), their leadership in imaging, ink chemistry, and the like, along with their heavily geekified storied past give them lifetime geek cred emeritus status.

Adobe / geek cred: 10
Geschke and Warnock were the ultimate geeks. They solved some of the hardest problems available to solve. Adobe calls their programmers "computer scientists." Adobe rocks, and all geeks know it, even if photoshop’s UI does sucks.

Don’t Have Geek Cred

Yahoo / geek cred: 5
Yahoo never really had much geek cred. They were, after all, initially a human curated web directory, not a software company. They did come out of Stanford which gave them a shot but they never really could pull it off. Hiring Semel as CEO did horrible things to their geek karma. He was the ultimate anti-geek, and so, while he shored them up in the intermediate term, in the long term, having no geek cred may be fatal. The specific embodiment of this problem is their total inability to create competitive search technology.

eBay / geek cred: 2
Meg Whitman is a management consultant, not a geek. They have no significant tech in the company beyond operations expertise (the ability to scale). They have lots of sales expertise. But no hard core tech, and a horrible user experience. And now Meg is leaving and they are probably going to bring in the number two. Another non geek management consultant. The ultimate reflection of their non-geekiness is their purchase of Skype. They thought it was cool, but really had no idea what they were buying. No good geek would have done it.They look dumb.

MySpace / geek cred: 0
No tech at all. Their systems are based on Microsoft servers because Microsoft helped them. That drops you to zero immediately because no other major players are based on Microsoft. But even if they hadn’t based everything on MS, MySpace is *painfully* geek free. You never see any MySpace employees on the tech lists I hang out in. I wonder whether any programmers work there :) The company has grown under Rupert Murdoch, but as a long term play, they will suffer the fate of AOL. Still, it was a brilliant cash flow generating purchase for Rupe.

Dell / geek cred: 2
Michael Dell doesn’t believe in tech. He is essentially anti-tech. This worked for a good long while, but now, not not developing *anything* is starting to look like a problem.

Motorola / geek cred: 4
They had great geek cred as a chip maker, and as a phone hardware maker. But they spun off chips, and phones have become about software as the hardware and manufacturing becomes a commodity. They have *no* geek cred in software. As a result they are in danger of shrinking to irrelevancy. The rats are leaving the sinking ship.

Palm / geek cred: 3
When Jeff Hawkins left, this was the end of Palm. It was a long time coming but it is here now. They have demonstrated no ability to do anything technical beyond milking the initial Palm Pilot innovation bone dry. Jon Rubinstein of iPod fame is the new chairman. I fear its too little too late. Like a liver transplant for a 110 year old man. The new rev of Palm’s OS is slated for 09. RIP.

IAC/ geek cred: 0
Barry Diller is brilliant, but not as the leader of a technology company. Barry, and the market, misperceived the Internet as being primarily about media. It isn’t. It is about access, which is about technology. Barry has failed because he thought IAC was going to be a media company. Not. They will continue to generate cash flow but there is no substantial growth there, even as 5 separate companies, as is the plan. He will ride out their incredibly lame tech like Palm, and the companies will all eventually become irrelevant as tech savvy competitors eat their lunch.

AOL / geek cred: 0
AOL never had any geek cred, even when they should have in the very beginning. This was a failure in leadership, because they were in a position to have great geek cred. Their failure became apparent to all geeks when they made it clear they didn’t believe in the Internet. Instead, Steve Case viewed them entirely as a media company. This killed them. Though, for AOL shareholders, the merger with Time Warner was brilliant financial engineering for those that got out in time.

Losing it But Not Lost

Microsoft / geek cred: 6
Microsoft is, perhaps, a unique situation. They have lots of great technology and are incredibly smart. But they are losing their geek cred. Talent is leaving. And they are flat footed in response to the Internet. They will not die any time soon, but it seems they really don’t get the Internet. And Bill Gates’ lionizing of Ray Ozzie I don’t get. Notes? Ugh. Groove. Double Ugh? They do have long term geek cred, but they may not be able to capture any Internet mojo.

Nokia / geek cred: 6
Nokia has the same problem as Motorola, they are just slightly better positioned. Nokia has hardware cred, but no software geek cred. Their handset hardware has been highly valued for many years. But hardware is becoming a commodity. They partnered with and invested in Symbian to gain some software cred. But this failed as Symbian is viewed with disdain by most of the software development community. Now software is key and they are looking down the Apple gun barrel. Though the analysts haven’t picked up on this yet, because Nokia is kicking Motorola’s teeth in. But Nokia’s time will come. They cannot become a software company. The die is cast.

This article was authored by Hank Williams who is a New York-based entrepreneur who recently launched a new blog: Why Does Everything Suck? exploring the tech marketplace from 10,000 feet.

Couple quick updates on the eBay auction front. Last week, we reported on Zpeech going up for auction on eBay. The auction has closed today at $2,500 but without reaching the reserve. I have not heard as of yet what founder Tim Rohrer plans to do with the site now. I believe he could sell it for the $2,500 if he so chooses.

The other site up for auction last week was YouAre.tv. This auction also closed today at $25,000 with only one bid at the final price.