Liberally Conservative

"Freedom is never more than one generation away from extinction. We didn't pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same, or one day we will spend our sunset years telling our children and our children's children what it was once like in the United States where men were free....... ~Ronald Reagan~

Wednesday, March 16, 2005

Something Forgotten or Simply Arrogance?

eBay CEO dropped out of the running as successor to current Disney CEO, Mr. Eisner. Michael S. Malone writes in the Wall Street Journal that Ms. Whitman is a rising star and further substantiates this claim with a past article by the WSJ. It's obvious that eBay survived the dot.com bursting bubble but misses a discussion of the recent increase in fees eBay sellers must pay due to quarterly earnings at eBay, which missed their mark. There was uproar and many prominent sellers left eBay or at least added alternative selling venues to their online selling businesses. Significant in Malone’s article are these quotes. "Consider: a tech company, literally appearing out of nowhere, that manages to find the one truly sweet spot in the entire dot.com boom -- not only where scale adds value, but where the content is endlessly "sticky" to vendors and customers, and where the users do most of the work. That company not only becomes one of the fastest growing enterprises in history, but it actually changes the economy by reallocating vast underused inventories. And by creating a new path of upward mobility, it even affects the culture."The key sentence is "where the users do most of the work." The users are, in fact, the sellers who took a message board and turned it into the most prominent online selling venue in the world. Build it and they will come! The eBay "back office" certainly provided the expertise of software and hardware to develop the venue but it had the free help of internal message boards and communication from users. A free source of information, synergy and brainstorming. Not a bad deal. Malone continues, "The heart of eBay is neither its employees nor the millions of people who bid on the site. Rather, it is the hundreds of thousands of eBay sellers. Many, if not most, are working folks or retirees, people just trying to make a few bucks and supplement their incomes, maybe pay for their kids' schooling or add another bedroom on the house. They don't want some scheming suit running their global flea market -- no, they want somebody like Ms. Whitman, who seems like a perfectly nice lady who probably had a very good reason for jacking up their fees last month." "a very good reason for jacking up their fees." Hmmmm, seems Malone missed the boat of journalistic inquiry. Had he considered more than his premise of touting a female executive and looked further into management thinking maybe eBay sellers would get a concrete answer as to why fees were increased instead of spinning the reasoning over and over while never getting it correct. Fact is, eBay got caught with its pants down while trying to bail itself out. They are able to escape critical inquiry because the "ma and pa's" at eBay can't figure it out, while some of us with education and experience in corporate finance and economics see through the eBay blunder. Mr. Malone is very impressed with the unassuming Ms. Whitman. "But it isn't to be. This is one marriage between Hollywood and Silicon Valley that, happily, won't happen. Mr. Iger gets the Mouse. And yet, in failing to land the Disney job, Meg Whitman may enjoy an even bigger promotion: finally being recognized for the great business executive she is. And knowing her, she will probably just smile and change the subject."

Correct Mr. Malone, Ms. Whitman simply smiles and changes the subject. If you tax your engine too much it quits running. Since 12/31/04 eBay stock has dropped 37.39% but they did have a 100% stock split. However, sellers are still waiting for answers, shareholders seem to have gotten theirs! eBay sellers paid for it. Ms. Whitman isn't merely smiling, she's laughing all the way to the bank. Beware those who bite the hand that feeds them.

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