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Key Takeaways

  • Over Labor Day weekend in 1995, Pierre Omidyar started AuctionWeb, which eventually became eBay, aiming to create an open marketplace connecting buyers and sellers directly.
  • EBay experienced rapid growth, with over $7.2 million worth of sales by 1996 and 250,000 auctions conducted in 1996 alone. The company sold its millionth item in 1997.
  • After rebranding as eBay in 1997, the company went public the following year and saw immense success. eBay has since diversified its portfolio and generated around $10 billion in revenue in 2022.

Over a Labor Day weekend in 1995, 28-year-old Pierre Omidyar began writing code for a website that would initially be called AuctionWeb. It was meant to offer an "honest and open marketplace" that would connect buyers to sellers directly. AuctionWeb went live on Sept. 3, 1995, with the first item purchased being Omidyar's broken laser point for $14.83. Omidyar reached out to the buyer asking if he had accidentally purchased the defective item. He learned that the transaction was intentional because the buyer wanted the spare parts to build his own.

Soon, business on AuctionWeb began to boom as people began listing and auctioning off all kinds of collectibles. By 1996, over $7.2 million worth of products had been sold. While the website was initially free, as traffic grew, so did the internet charges, leading Omidyar to charge a small fee to customers who purchased items through AuctionWeb. Throughout the entirety of 1996, 250,000 auctions were conducted on the site, but there were 200,000 just in January 1997 alone. And that same year, the company sold its millionth item: a Big Bird jack-in-the-box. AuctionWeb was on the rise.

However, it was time to change the name. In September 1997, the entrepreneur rebranded AuctionWeb to eBay, which many know as the auction house on the internet even today. Omidyar originally wanted to name it after his consulting firm, Echo Bay Technology Group. Since was already owned by a gold mining company, Omidyar decided to buy the domain, which is still the domain leveraged by the firm all these years later.

As eBay grew both financially and in terms of employees, the company's board decided to go public in September 1998. In a surprising turn of events, it surpassed its target share price of $18 with ease, ending the trading day at a whopping $53.50 per share on NASDAQ. Overnight, Omidyar and some of his partner executives who owned shares had become billionaires.

It was mostly onwards and upwards from there as sales exploded on eBay. Then the company started branching out, acquiring several companies, including Skype, PayPal, Gumtree, and more over the next few years to diversify its portfolio, integrate with more services, and reach more customers. Although it has sold off many of these firms now, it's strange to imagine that the Skype brand was owned by anyone other than Microsoft at one point in time.

Still, eBay generated roughly $10 billion in revenue in 2022, a massive feat for a site that began as a single-employee project during a casual Labor Day weekend a few decades ago. We still consider eBay as one of the best places to purchase used phones and many other devices, and that'll likely continue. Many of its earliest employees are still working at the firm, even though its founder isn't. Omidyar stayed on as the chairperson until 2015, and he currently serves in a mostly honorary role of director emeritus, which means that he can attend board meetings that he is invited to but can't vote.

But you might be wondering what happened to that broken laser pointer purchased by Mark Fraser. Fortunately, the first-ever item sold on eBay is still very much intact and in the ownership of Fraser. Interestingly, the now-retiree never ended up actually using the broken laser pointer, with the item being left forgotten in a drawer until years later when Fraser decided to reach out to Omidyar to congratulate him on the company's success.

Fraser has pondered the possibility of auctioning off the item on eBay again, speculating the price tag it would fetch this time. This hasn't happened yet, so we can only imagine what a famous piece of history like this is worth, especially given how far along eBay has come since its launch 28 years ago.