EBay was founded in 1995 to conduct the kind of business traditionally seen in venues like garage sales and flea markets but in an online environment accessible 24-hours a day. It was, in short, a dream for junk lovers the world over.
Now the site is a multi-billion dollar international business with a presence in 30 countries, but it began with the simple premise that one person’s trash is another person’s treasure. Case in point: the first item sold on eBay (when it was still known as AuctionWeb) was a broken laser pointer.
The arguably worthless item was posted as a test of the system, but received a winning bid of $14.83. When eBay founder Pierre Omidyar contacted the winner and asked if he knew the laser pointer didn’t work, he received a succinct reply, "I'm a collector of broken laser pointers."
This rummage sale ethos alone was enough to make eBay profitable from year one. The site was quirky, and fun, and carried a high level of stickiness. Users loved to brose the auctions, a sales model that engaged their competitive juices and led them to bid on the listed items no matter how improbable they might be.
From the beginning, eBay achieved market fit in a well-defined niche and did quite well until a three-year period during the tenure of then CEO Meg Whitman. During that time the company’s stock price dropped 50% and its market value declined by $30 billion.
Most critics agree that two actions in particular damaged the highly successful company during these years, the purchase of Internet telephone service Skype in September 2005 for $3.1 billion and a failed attempt to enter the China market.
Whitman retired from the company in 2008 and was succeeded by Jack Donahoe who was faced with re-growing an already successful, but then floundering company. One of the primary fundamentals of growth hacking is constant reassessment and redesign, which is exactly what Donahoe did.
He saw Skype as a distraction that brought no added value to the company, so he sold a 70% stake in the service to a private equity firm for $2.75 billion. This was the first step in re-honing eBay’s commitment to the person-to-person sales that were its core vision in the beginning.
The effort began to pay off, as reflected in eBay’s year-over-year growth figures:
Because there is no point in spending good amount of money for bad marketing