There’s trouble in the Kingdom; send a message to the King.
..or in this case, Queen.
It seems a cabal is forming in tech circles, in the media, and the blogosphere around the notion that it might be time for Meg Whitman to be shown the door at eBay. Henry Blodget (yes, that Henry Blodget) makes a compelling case for the prosecution in his blog. So, too, do MSN’s Kim Peterson and BloggingStock’s Gary Sattler, albeit in a more measured way.
If this comes to pass, this will be quite momentous for a variety of reasons. I, for one, will have mixed emotions as I consider her stewardship at the company by and large a success, but — in the aftermath of some questionable moves and clear stumbles (Skype!?!) — not an unqualified one.
Without argument, Ms. Whitman guided eBay through serious competitive challenges in its early days to bring the company to its current status as a bona fide ecommerce juggernaut. Her leadership in those years was the sine qua non of the company’s success as the undisputed leader of online auction retailing. During her ten-year tenure, eBay has seen enormous growth, is now active in 40 markets, and has more than 230 million registered users. As I have alluded to in earlier posts, those coveted but elusive “network effects” that all VCs and management teams strive earnestly to achieve in their own companies (but rarely do so in the real world) are in clear evidence at eBay. There are precious few other companies that can demonstrate that in such an abundant, palpable way. The liquidity of eBay’s marketplaces across categories is what draws buyers and sellers to its platform over all other auction-based retail offerings (Yes, there actually are a few competitors to eBay out there, believe it or not.) Each new participant – whether buyer or seller – that participates in the marketplace thereby enhances the total value of that marketplace and the value to all members. And so on and so forth. Competitors could scarcely land a glove on eBay once its marketplaces grew to that level of liquidity.
But, as they say too often in this rough-and-tumble capitalist world we inhabit, that’s old news. What have you done for me lately, Meg?
I’m only half joking, of course. The proponents of the ‘Dump Meg Now’ brigade loooove to point to Skype as their Exhibit A. I will grant them that, but is goes deeper than Skype. There is also the prattling on about her decision to sign up as financial co-chair of the Romney campaign, or the loss of heir apparent Jeff Jordan (now comfortably ensconced at Open Table and, I would imagine, eating well.), or the debacle of eBay China, or the seller revolt last year over restrictive policies and fees, or the God-awful interface that remains as clunky and unrefined as ever. All worth debating, but my sense is it has been the strategic missteps and missed opportunities in growing eBay beyond its core business that is most glaring. — and, by extension, most responsible for the abysmal performance of its stock. I believe that upon examination, and with all the relevant facts, one can conclude in a clear, measured way that eBay needs new leadership. And that time is now.
eBay peaked early, one might say, but has been unable to broaden into new areas of retailing that other competitors — most notably Amazon — have seemed capable of doing with speed and effectiveness. Some cynics have gone as far as to opine that eBay’s market position and momentum when Ms. Whitman came aboard was such that its eventual and lasting domination of its core market was almost pre-ordained. I reject that argument. To her credit, Ms. Whitman has continued to try new marketplaces and new ideas, but lately they have brought largely unsatisfying results. Some ideas simply made no sense. [Does anyone remember eBay real estate? Hello?] Other ideas that made a LOT of sense and were seemingly slam dunks were left to languish so long that the initiative and the window of market entry were lost [i.e., re-launching eBay Motors’ auto parts marketplace. It’s still the mess it was in 2001 when they were (briefly) recruiting an auto parts expert to build the business. Their bloated, glacial hiring process turned off good candidates, they never ended up hiring anyone, and the idea died on the vine; potentially a billion dollar revenue opportunity, blown.]
In past years, eBay’s leadership position would insulate it from these blunders, but not any longer. Amazon has done a remarkable job building a truly inspired marketplace and is now the benchmark for online retailing. It has become a destination site for a whole host of activities beyond purchases — product research, reviews, community features, etc. Amazon has also beefed up the features and functionality that allow users to sell their own items on the site which, naturally, is one step closer to a direct attack on eBay’s core market and raison d’etre. Craigslist, the quasi-crunchy global bulletin board, is another obvious threat; but to date, Messrs. Buckmaster and Newmark seem content with their current market position and — according to their 60 Minutes profile, at least — do not seem bent on online world domination. We’ll see how long that lasts. If Mr. Newmark starts to change his demeanor, or simply takes a few pages out of the Bill Gates competitive playbook now that Bill G will be hanging up his full-time skates come July, eBay will have its work cut out for it in staving off Craigslist.
Amazon’s stock price has skyrocketed, reflecting the company’s new vitality. In contrast, eBay stock has languished at $30-35 last year and had a lousy 2006. For some shareholders, this alone is grounds for a beheading. For me, the issue is that, quite simply, eBay seems utterly bereft of a clear, decisive strategic vision. Moreover, this comes at a time when the competitive landscape is changing rapidly. Old assumptions must be reconsidered and new approaches applied. For a variety of reasons, Ms Whitman is not the person to implement the kinds of changes and the overhaul required to right this ship. I believe it is high time to thank Ms. Whitman for her long service and to bring on a more visionary leader with bold new ideas to reinvigorate the company and reassure the rank and file, jumpy shareholders and irate users that the future of eBay is bright, exciting, and compelling.