The HBR Interview: How eBay Developed a Culture of Experimentation

Reprint: R1103G

Donahoe took over from Meg Whitman, eBay’s celebrated longtime CEO, just under three years ago. The core business was slipping, and eBay’s acquisition of Skype had gone wrong. The challenge facing him was how to keep the company strong despite enormous changes in consumer behavior. He talks about capitalizing on mobile technology—eBay’s iPhone application, “by far the largest m-commerce application in the world,” went from $600 million in volume in 2009 to between $1.5 billion and $2 billion in 2010—and breaking down the barriers between operating online and off-line. The company’s acquisitions of RedLaser and Milo, for example, mean that you can walk into a store, scan an item you want with your smartphone, and learn its price both across the web and at merchants within five or 10 miles of you. Because product search on the internet has undercut the power of eBay’s auctions, Donahoe is working to make its marketplace indifferent to format. He expects that fixed-price sales will eventually account for 70% of transactions. But that will require re-architecting almost every element of the business system.