A visitor to eBay's San Jose, Calif., headquarters one recent morning came upon an unusual scene. Some 20 men and women were milling around until suddenly a company official emerged and called for new employees to follow him for an orientation. The lobby emptied.
At a time when layoff announcements are numbingly routine, the scene in eBay's lobby is an oddity - not just in battered Silicon Valley, but across corporate America. EBay CEO Meg Whitman won't say how many people the online auctioneer is planning to add to its workforce of 2,400, but the group orientations are held weekly.
Virtually every technology and Internet company is either treading water or drowning, but Whitman's eBay is growing stronger and healthier every day. What started as a quaint auctioneer of useless collectibles has grown into a commerce powerhouse. In just six years, eBay has become arguably the only large, unquestionably successful consumer Internet survivor.
"EBay is what all of us wanted our Internet businesses to be," says Mark Goldstein, former CEO of BlueLight.com, the online unit of discount retailing giant Kmart. Marvels Michael Dell, CEO of Dell Computer, "It looks like a great business to me."
Such praise is certainly deserved, but it has helped to inflate eBay's stock price to Internet-bubble proportions. That means eBay will have to continue delivering a flawless performance and dizzying growth, while preserving its prized community spirit. The slightest falter could leave it in the same straits as its beaten-down Internet brethren. "This may be one of the biggest business opportunities we've seen in a long time," says Morgan Stanley analyst Mary Meeker. "To tap its opportunities, the eBay team has to continue to execute very well."
So far, it has. From the start eBay set out to build one of the few truly virtual businesses on the Internet. At relatively low cost, its site allowed buyers and sellers to do online what they couldn't do offline: Sell anything, anywhere. In the language of Silicon Valley geeks, the business model was scalable - it could grow unbounded with no need for eBay to add stores or warehouses. The more it grew, the more money eBay would collect.
But what's surprising is not that eBay was scalable, rather it's the extent to which eBay has scaled. Skeptics predicted early on that the company's growth would peter out once the collectibles market was tapped out - and the novelty of buying at auction wore off. Instead, the opposite has happened. Over the past year, eBay has successfully transformed itself into a platform for trading everything from chairs to computers to clothes. Businesses small and large discovered that eBay is a cheap and effective way to reach millions of customers. They have propelled the company into a formidable growth spurt, even as the overall growth of Internet commerce stalls.
Sun Microsystems and IBM now sell computers on eBay. J.C. Penney, which boasts a thriving online retail business of its own, has tested eBay as a virtual storefront. Regional consumer electronics chains are using eBay to battle the likes of Amazon.com and Best Buy. Every hour, 10 diamond rings, 120 PCs and 1,200 articles of clothing are sold on the site. And there seems to be no limit to what people will trade: The Minnesota house where Bob Dylan grew up sold recently for $94,600, and a Beechcraft "Duke" twin engine airplane sold for $100,000.
