Peter Wayner passed us this review of Adam Cohen's The Perfect Store, a chronicle of the rise of Ebay. Read on to learn more about the people and ideas behind the dominant online auction site.
According to the tale, an atheist
traveled to Rome to check out the Catholic Church,
and saw, through some odd gift of divine grace,
that the Devil himself was sitting at on the
throne of St. Peter and ruling the Church
disguised as a Pope. The atheist
reflected upon the paradox and then became a
devout Roman Catholic. Why? He reasoned that
only the one true faith could succeed with the
Devil himself in charge.
Leaps of faith take many forms, and none were stranger to the world of the 1990's than the possibility that people might buy objects they've never touched from people they've never met and send money to addresses they've never seen on the basis of a bunch of colored stars summarizing a community's collective opinion. Yet that's eBay -- and now anyone curious about the communion of online buyers and sellers can turn to The Perfect Store by Adam Cohen. The new history chronicles the purity of the founder's vision, the tumultuousness of exponential growth, the tremors of bliss rippling down the spines of the auction winners, the purgatory of crashing servers, the saintly trust of the masses, and the deviltry of the few. Through all of these trials and tests, the company prospered with a steadfast devotion to a libertarian's dream of a frictionless marketplace where buyers and sellers could engage in a conversation to discover the one true price.
The book is sort of a hagiography, although focused more on the marketplace community than the corporate leadership. Almost every twist and turn of the company's history seems to depend upon how well the people adhere to the vision of a hierarchy-free community of buyers and sellers. The company thrives when they make it easy for goods to find the people who want them.
The book begins where eBay itself began: in the vision of the founder, Pierre Omidyar. The book follows him and then the people who join the company by laying out a largely chronological collection of important milestones, interrupted every now and then with a tale of some quirky eBay member. The author, Adam Cohen, may not speak with the earnest voice of a true believer, but he is largely happy to describe the decisions with devotion and reverence. This shouldn't be surprising because he worked closely with everyone at eBay and even had his own company ID badge and work space in the office building. He obviously spoke often to the core team and the history is filled with their words.
But the book isn't a dump truck filled with happy stories. The book manages to include almost all of the major controversies that I, a casual eBay user and fan, remember. There's a long discussion about the decision to ban guns and plenty of talk about the right way to handle pornography and used underwear. Cohen also interviewed a number of the disenchanted members who developed a love/hate relationship with the marketplace run by one corporation. They keep talking about quitting or protesting or going somewhere else when eBay keeps jacking up the rates, but every time the market dominance of the company keeps pulling them back in.
The later half of the book is largely filled with these controversies, in part because there are only so many ways you can keep repeating details about the company's phenomenal growth. The viral explosion of new listings was the story at the beginning, but after the IPO cemented the success, the management had to wrestle with the bits of evil that would drift into the network.
Most of the coverage of these battles is straight-forward and carried by a flat tone typical of journalistic distance. The analysis and criticism are largely left for the reader to assemble, although the parts aren't hard to find. For instance, we learn early that Omidyar's experience in the 1980's with the fat cat-friendly IPO market inspired him to create a neutral marketplace where all buyers and sellers were equals. He apparently tried to buy into an IPO only to discover that skinny cats didn't get to buy at the issuing price. Back then, Omidyar was a skinny cat.
But when it comes time for eBay's IPO, the people on the company's throne skipped the chance for an eBay-like OpenIPO. Goldman Sachs got the opportunity to pick an opening price for the stock, and the investment bankers managed to find a number that left a lion's share for the usual fat cats.
At the time, Omidyar, the other members of the management team (Jeff Skoll and Meg Whitman) and Benchmark Capital controlled a stunning 98.1% of the stock. They quickly became billionaires. Many of the workers made a few million of that 1.9% divided among the rest, but everyone else was left out. The thousands of people who worked the bulletin boards, and help create a cohesive community ruled by colored stars got nothing. This continues to be a bitter point for many involved with eBay from the beginning. Money weaves a strange path in and out of the narrative. On one hand, marketplaces are all about price discovery. The only reason to list an item on eBay is to get money. On the other, the book gives the impression that it's kind of crass to be into eBay for the money. The eBay folks are supposed to be passionate believers in this community ruled by colored stars. It's all about community, we're told. But I guess if you can't get IPO shares, that's what you have to live with.
The book may be best as a sly bit of exploratory surgery aimed at the strange desires in our body that drive commerce and trade. Some of the vignettes of eBay members are priceless and the stories about the effect of eBay on the market for collectables are not to be missed. Before eBay, the members of the Midwest Sad Irons Collectors spent hours at garage sales and antique stores looking for what many of us might call a rusting hunk of metal. There were even conventions populated by dealers helping people find what they wanted. All of the socializing and chatting intertwined in the weekend swapmeets became history when eBay made it possible for anyone to get what they want by plopping down big bids. There's no need to go to wade through church yards filled with schlock to find the grail of sad iron collectors, the swan-on-swan. Someone else is doing it right now... and all you need to do is grep the database. If you're lucky, there's no reserve!
At moments like these, the essential paradox of eBay becomes clear. On one hand, we're really after the stuff. We want the Pez dispenser, the Hair Bear bunch poster or the Elvis jacket. Do you realize how hard it is to find one just like that?
On the other hand, anyone with a bank account can buy any collectable now. There are dozens of every collectable waiting for buyers on eBay. Purity of heart, steadfast devotion to the goal, or indefatigable energy won't help you find the Grail when it's just a matter of typing the right number into a web form. There's no real scarcity anymore if you've got the right credit card. Which brings the question: if the items aren't really scarce, why would we want them?
The real problem is that eBay strips away the narrative from the objects. Flea markets, classified ads, and garage sales toss in stories for free and this is what the dinner guests, the friends, and the collecting buddies really want. They want to hear about the clueless, the loopy, the obnoxious, the greedy, the windbags, the ditzes, and all of the other characters buying and selling sad irons.
Adam Cohen's history, The Perfect Store, is a crisp, clean, and thorough retelling of what made eBay what it is today. It's a good story and you can't just buy those. Wait, I guess you can -- and the publisher is willing to print as many as the market will bear. Well, there's another paradox: Maybe, if eBay can survive with this many strange, wonderful and bitter stories, it may be the one true thing after all.
Peter Wayner is the author of Translucent Databases , a book commodifying the protection paradox. It describes how to build databases that reveal nothing to the wrong people, but everything to the right people. You can purchase The Perfect Store from bn.com. Slashdot welcomes readers' book reviews -- to submit yours, read the book review guidelines, then hit the submission page.