The Ostrich Report AKA: The Marketplace Podcast Week 5 eBay Part 2 - Sliding Doors

Hey, welcome back to the Ostrich Report. This is episode 5. I am Vinny O Brien from RMW Commerce, and with me today, as always, is my good friend Hendrik Laatsjer. Hendrik, say hello.

Sup?

Sup? Like it. How's winter in Cape Town?

Uh, winter is winter is winter. Um, as you can hear from my tone, my dear friend, um, I'm not a cold person. We've seen a few amount of rain, um, but, uh, it's given me time. It's given me time to maneuver and talk to, you know, the newest big buzzword, uh, large language models. You know, those LLMs, I've been speaking to them. Massaging them, I think is the words. Um, and I'm very excited about today's conversation because, um, we stopped— it felt to me like in the middle of our, uh, I'll Look Back at eBay. But I think there are some sliding moments that we still need to talk about, because if we don't speak about them we're not doing the company justice.

They'll never be spoke about. So I think, one, I'm glad you're not too cold in South Africa for winter. Um, you've never done an Irish winter, um, which is just miserable, but we, we, we kind of, we struggle on. LLMs, they're being fed a lot of information right now. We are using them in our lives now. This is something that's uncorroborated, so I saw an interview with someone whose name escapes me right now, but he claims he's an ex-Pentagon AI dude. He claims that 20% of our daily lives are currently orchestrated by AI, that we use them so much on a day-to-day basis that he can break it down to a number of hours that we're using them on a daily basis. That comes from Spotify, Netflix, all these other areas that we're actually feeding information in. So there's my little LLM fact for you today. What you make of that, dude?

I didn't need that so early in the show. Um, we, we are still dealing with— I'm still trying to make peace with dealing with, with somebody that doesn't really exist. So when I hear the words, um, orchestration and all these big words from you, it makes me feel even more like We are a few steps away from Skynet.

Well, let's bring it back to something more wholesome then. I'm going to talk '90s rom-coms for just a minute. You mentioned sliding moments. We've— we started talking about eBay on the last episode, and we both agreed that we were talking about sliding doors moments, and we want to talk about some of those missed opportunities today for eBay. But did you know that Sliding Doors was a 1990s rom-com?

Uh, yes. And, uh, say again?

Name the lead actor and actress.

So actress, I can mention, uh, it's Gwyneth Paltrow because I watched the movie.

Correct.

Um, and, uh, the actor, um, you're gonna have to help me.

The fact that I was in Four Weddings and a Funeral, read out a lovely poem. His name is Mr. John Hannah. An unlikely pairing. Yeah, he was in a couple of kind of detective series as well, but, but I digress. The concept that was really interesting, that, you know, you, you go through daily life and you have these moments that are sliding doors, and if you make one choice, one thing happens, and another, another happens, like the butterfly effect, which are kind of fascinating concepts. And when we put them in context of eBay, they become even more interesting when we look at marketplaces and what we're trying to do. Now, we've kind of got 3 big questions in this show. That's what we're trying to achieve. But just to qualify eBay again, eBay still has over 1.5 billion listings live at any time with over 20 million active monthly sellers. It's in 190 countries, and GMV will peak at over $100 billion again this year. We're not talking about a startup that is, you know, peaked and seasoned. Um, eBay is not going anywhere, anywhere soon, and I think that's the problem— not going anywhere anytime soon. So when we talked about this and one of those we wanted to look about, we kind of left at around 2015 on the last day, and we, we were looking at the, the split between eBay and PayPal. This was their Brangelina moment, you know, that things all went pear-shaped for them. Another nice rom-com movie moment there. Mr. and Mrs. Smith decided, um, they were getting too big for each other. And, you know, PayPal has certainly kicked on and done quite a lot since. But culturally, they're both quite apathetic when it comes to growth and developing new ways of delivering e-commerce. I wonder, do they both know something we don't? But let's go back to when eBay was spun off— or sorry, PayPal was spun off out of eBay. Why did that happen at the time, Hendrik, and what was the driving force, or who was the driving force behind this?

So I go back to this period of time, and man, it pays— it's sad for me to say this out loud— this was the first experience of me learning what an activist investor is. This was— drive was this whole spinning off situation was driven by an investor that told the eBay board that they needed to do right by investors and they needed to give investors' capital back. I'm not going to mention the man's name because he does not deserve the credit. Um, he, he's a— he essentially hurt a business that I love. I know there's millions of those situations in the last 10 years, so please don't come at me. Anywhere on social media. But the point is, is that eBay was under pressure from an investor that basically said at the time, um, San Jose, you weren't, you weren't growing too quickly, you were not going anywhere, and as a shareholder, I need value. And for me to generate that value you need to spin off your payments business because, because the payments business, um, supposedly had more upside. What I don't tell you in the last 2 minutes is that at this specific time, and this is for me one of the few times that I can remember, especially in the marketplace sector that you had the mighty Wall Street not in total alignment. I kid you not, investors were not all sold. But, and I hate going down this route because, but I have to, I think this sliding moment is, if you think about it, essentially more of a sliding doors moment than what I think that people are aware of. So if you go—

can I just pause you for a sec? Because for those of us maybe who aren't in, um, the stock market as much, how frequently does a Carl Icahn moment happen for, for, uh, a public company to be put under so much pressure and in such a public fashion as eBay and PayPal were to spin off, and then he put his money where his mouth was, or his stock where his mouth was at least, and transferred his eBay ownership into PayPal. Frequently does something like that happen, Andrew? Can you just let people enlighten them a little bit?

So let's, let's That's a very good question.

So I can't remember of it, of too many incidents since.

So, so to your point, I view this, this situation we are talking about as the first case of an activist investor basically saying, what are you doing? We are subsequently have seen companies like Elliott and others take positions in boards. So to answer your question, how does this happen? So as companies are publicly traded, you can buy shares. So you're a hedge fund or you're a large private equity fund, but in most cases it's hedge funds that have way too much money to begin with. But what they do is they buy a percentage of stock. It's normally between 5% and 10% of the, the company's total stock. And then when they get to the 10 to 15% stock, they send a letter to management and they tell management, look, we now have a not an insignificant amount of stock, Vinny. We now want a board seat, and we want the board seat because we believe management is not doing its job. So, so I think the challenge is, and I say this with all due respect to the man that you mentioned that I can't mention, you know, the, the investor, um, and these other guys now more recently like the Elliotts, is that we have yet to see a solution in which It's not a massive cash grab.

Yeah, like, to kind of just tease it out again, and just so I'm clear, this doesn't really happen. It doesn't really happen in public either. And there were a multitude of reasons the eBay board should have been stronger, really, at the time and held more resolute, but, but they didn't. And At the time, PayPal was such a significant part of the eBay process. It wasn't just that it was the payment mechanism of choice, it was also that, uh, it provided buyer and seller protections. It was part of the trust setup. It was, it was the thing that people relied on. It was almost like the, the brand equity that eBay had built up over its competitors that now wanted to spread its wings a little bit and get into the the competitive world of online payments and gateways and extending beyond its mothership. eBay didn't move quickly to replace it, if memory serves me right. They were slow to say what it is that they do next. I just want to parallel that for a second because we talked a little bit about Skype last week as well, and they've done something similar. They bought Skype really early in recognizing we need better communications. Between buyers and sellers, and we want to facilitate that through chat, video chat, and texting. And they subsequently sold it only to repurchase it to resell it again. Is eBay's problem that they don't know what to do with innovation at scale, or is it that they see these as cash flow opportunities to keep the books healthy and keep, keep things on an even keel? Like, what way do you read their inability to turn brilliant technology into useful innovation within a platform?

So that's a really very big question, and I, I have— I've had my own thoughts about this for years. So news flash, I haven't really spoken about what I, I'm going to say in the next by a couple of minutes. So folks, this is going to be a big deal.

We should put a disclaimer on here, um, just to make sure that this is not stock investment advice. This is just—

yeah, but Hendrix rumblings. Yeah, but dude, I sit in the middle of nowhere, I'm not an American citizen, and yes, let me just say this out loud, this is not financial advice. Please do your own due diligence, blah blah blah blah blah blah. You know, Vinny, what is the biggest thing that I think people in the e-commerce sector will be surprised about is that eBay played a very significant role in the 2000s, and they, they passed that role on to Walmart in the, in the, in the 2010s. So what am I talking about? Because eBay was generating so much cash And let's be honest, it was a cash-making masterclass. They were doing cash. So what do you do when you generate cash like that? You suddenly have the capital to start looking to buy companies. But what does buying companies actually do? You are giving private investors— hello, venture capital— you're giving them the opportunity to make an exit. And in the e-commerce world, exits is a big deal. Let's be honest, as we sit here in 2025, um, venture capital companies have not gone public as fast as they should, number one. Number two, there's not many companies now buying startups because of regulation. But I think the biggest challenge was, was that And I think we need to go back just quickly to the PayPal situation. I blame the eBay board. I think the board, the board put pressure on management to do things because you have this capital and let's generate more cash, but nobody ever had a plan. So when you buy Skype Okay, what are we gonna do? We are gonna do da da da da. We never saw that, we never heard that. Then with the PayPal selling, I think we need to mention here very, very importantly, the CEO of eBay, a man by the name of John Donahoe, he was, he was going to become the chairperson of PayPal.

So you will say JD and you won't say Carl Icahn. I'm learning lots about you today, Hendrik. Carry on.

But, but I'm, but I'm, what I'm saying to you is, is that for me, this is a case of misalignment of incentives. How can your CEO of your company that's being paid millions of dollars, who's supposed to be the, you know, the person that's protecting the business at all costs, basically at the, at the sliding doors moment, then basically tell, tell people that Oh, by the way, I'm gonna become the chairperson of the other company.

So again, I'm gonna stop you because—

can I just, before you go on, I just need to mention one thing here.

Go for it.

Let's— folks and listeners, I need to say this out loud because I'm seeing this movie again. And yes, there's a lot of movie mentioned, uh, but the movie that I'm seeing again is, is that our friends in the e-commerce world do not understand that payments is a volume business. So when PayPal was spun out, there was a new leader by the name of Devin Wenig. And what did Wenig do? Wenig started looking for payments processors as a way to generate more profits. Can anybody tell me more misaligned incentives? PayPal payments and profits? What? How? Who? Tell me, please.

So I'm going to dig in a little bit more because there's, there's more to it. So we, we— I've kind of asked the question, is it eBay's inability to, to provide innovation? Do they not know what they're buying when they get it? Or is it all about cash flow generation and keeping the books looking healthy. So I'm going to go further east, I'm going to go to Jamar, over to Asia, where, where eBay made another strategic acquisition, um, not during a dissimilar time either, which they've subsequently not done a huge amount with. I think they have a minority ownership right now as well, and in doing so they had an opportunity to consolidate the, the e-com market over there and auction market as well, and they didn't do it. Again, what's that telling us about their acquisition strategy, their investment strategy? And it leads to one very clear answer in my mind. Okay, well, well, I, I think it's about the books. I don't, I don't think they want to provide huge amount of innovation on the platform, um, because they don't, they don't know how to do it. I don't think they've got the team to execute on the platform across 190 countries. That's going to be big. Amazon even struggle with that. And I don't think they find it very profitable to do it. The kind of the follow-on to that then is to say that they are kind of fumbling in the dark a little bit. And it makes me wonder, it makes me chuckle, I think, when I think about their lack of investment in AI. Like they have given data to Perplexity, if to read everything that we believe, and they're trying to improve. But they've had problems with listing quality, trust. They've had so many areas that simpler applications of LLMs could have helped with over the years, yet they haven't provided solutions that would benefit both sellers and buyers. So I think we're learning, if you look beyond, um, the, the kind of strategy here, that, that they really have to provide shareholder value, ongoing cash flow stability, and they don't really give a shit about innovation.

Yes, I agree with that. That's very blunt, but that's very spot on. And that leads me to the next thing that I wanted to talk about with this mindset, you, that you have just, you know, very succinctly explained. Now we— now I go back to something that makes me even more sad, and that is that Ebay, just think about what I'm gonna say in the next 60 seconds. So this is not gone in 60 seconds, but it's— it feels like it's close to it. If Ebay executed and innovated, we would not have seen The RealReal, StockX, and wait for it Wait for it. We would have not have seen a Zillow. Can you have never seen these marketplaces because eBay was first to market? And what you have just said, my dear friend in Ireland, if you have innovation in your culture And I can think of a few marketplaces that have that as the, like, the North Star. There's one Seattle company— I'm not going to talk about them because we're talking about eBay— but if, if you have innovation in your DNA, you are never happy with just being a value creator and then selling the value so that you can then regenerate cash. So that you can then, you know, pass that cash on to investors. Just listen to this, what I'm saying again: no RealReal, no StockX, no Zillow. I can go on. So what does it tell you? It tells you that eBay, for me, was far ahead of the curve in terms of what they offered customers But because of the lack of innovation— and this is gonna suck what I'm gonna say now, but this is a fact— they gave venture capital investors the opportunity to invest billions of dollars in startups that literally started to erode eBay's value. And because there's no innovation And I hate saying this again, you, you get to a place where the current CEO of eBay is having to play defense. You're having to focus on one market— hello, United States— you're having to focus on things that are massive. Did I even mention that, you know, eBay is one of the largest car trading platforms in the world? Hello, no Fanatics. Hello, no Fanatics and all of that situation. So what I'm mentioning here to you is Zillow, um, The RealReal, um, all of these companies have one thing in common— most of them have had billion-dollar valuations. So what, so what I'm saying to you is, if eBay, if eBay kept the culture that they had and added innovation in the last decade, dude, this company would have been a $100 billion a year business because they had these verticals where they were so far ahead. But because they didn't really want to do that, and as you mentioned, they were more interested in their profit and loss— Lord help us— they basically are where we are.

For me, this is really And I think for something like automotive, where the threat comes from is not where eBay are looking directly. I think the growth of B2B commerce will provide a blinkered threat to someone like eBay, because now you're going back to source, now you're going back to manufacturer, now you're going back to people who want to reclaim some of the, the supply chain margin that is there that eBay have enjoyed for so long. And I could see in the next 5 to 10 years, that vertical dominance that they've had in automotive could come under severe threat. We see—

can we just talk about the fact that in automotive they've changed the— you know, consumers can no longer get free returns on car parts. You are now going to get charged for this. Can you tell me that you are killing your business without you telling me you are killing your business? I mean, hello, I've given you my private answer on that.

I, I think I might as well talk about it publicly. I, I think it's shambolic. I worked in that sector for a number of years. I know it really, really well, and it just shows a lack of desire to help the seller on, on one side and make sure that there's data accuracy, to be committed to, um, backing the seller as well. And, and the buyer is just going to go elsewhere to get their parts.

They're not What are we, what are we confirming? For me, what we have confirmed in this conversation thus far, in this episode, is that eBay, as much as they had a creation of value and shareholder value, in actual fact, a large— the last decade of, of eBay's business was about value erosion. You know, how can we move things away from us so that consumers go to other, other apps, other websites? And, um, and then when we're in a corner, then we go back to, you know, we were the flea market of the internet, we're gonna focus on the things that make us important, blah blah blah blah blah blah. Yet the, the The bird is through the coal mine, and I'm just scared that this business is gonna get forgotten. And I, I just want to just reiterate this: if you are listening to this podcast and you work in e-commerce, and especially in marketplaces, you need to go down on your hands and knees and thank the dear Lord that we as a sector had eBay. Because a lot of the things that we now take for granted, that's just there, was things that eBay built. But if you ask the newest generation of e-commerce executives what eBay is, they give you the side eye, they give you an emoji, and they look at like you are mad, which for me is sad.

It is, but we can't be nostalgic anymore. I, I've come to learn that myself. I think what we're summarizing, like what we've summarized here, is that The sliding doors moment on eBay was not about investment, it was about their decision not to innovate properly and design a culture that allowed innovation to be like core to what they do. And that stopped happening around the early 2010s, it feels like. Now, coming close to the end of our session today, but let's, let's ask a kind of more pressing challenging question. Where to for eBay from here? Like, can they, can they reclaim their crown as being real innovators in the space of commerce? I, I don't think the circular economy is enough to bring them back there. I, I think there's others that are doing that far better. Can they innovate their way out of this, Hendrik, or do they just become this part of the infrastructure, slumbering giant that, that will eventually be divested, broken up and be forgotten about?

Vinny, it pains me to say it, man. We've already seen the answer to this question. It's also— it was also in California. It's another OG of the internet. It's called Yahoo. We've seen how this ends. And to your answer to your question about the future, I don't see any mention of eBay doing anything with AI, generative AI. In actual fact, I'm seeing them give away all the value to third parties. I don't like that at all. Number 2. Number 3, in a world where search and, uh, organic is disappearing faster than what anybody can talk about, Why will people come to eBay if they can just open ChatGPT or whatever service they use? You know what, insert LLM name here on the screen, and then, you know, you'll find what you want. But there's no need for them, you know. If I compare them to the, to their peers, their peers like Walmart and Amazon are investing billions of dollars into making sure that they don't get left behind. We are in the middle of 2025. I am yet to see any mention from Mr. Uh, Yanoni and others about how eBay is going to use artificial intelligence. I continue to read them, you know, talking about spending more capital on advertising, blah blah blah blah blah blah, but Um, sadly, I think the answer to this is eBay will continue to be eBay, and we will continue, continue to see another, you know, legendary child's story— the tortoise and the hare— and eBay being the hare— sorry, the tortoise— and the entire other part of the ecosystem being they— it's just, we've seen this movie before, man. Why did you let me go on such a negative rant? Now I'm just sad as hell. Come on, Vinny, you can do better than that.

Look, all you got to do to confirm all that is go on the platform and try and buy something today. I, I think that's where your sadness starts and begins. The good thing about, uh, your sadness is that it ends as well. With all of these things, life goes on. But what we will have is this legacy business that we kind of lament, but maybe the problem is us, not the platform. Let me end on this even sourer note. Maybe it's our generation that have hung on to legacy technology and we get caught up in all the things of our past that don't allow us to move forward. And maybe we should be more like Gen Z, Hendrik, and just throw the shackles off and say, to hell with convention, we're just going to do things a new way and not give a damn about what's been before us. And maybe that's the way forward. Maybe you need to be more like the Gen Z population. How about that, Vinny?

Dude, you have violated me with that thought. How dare you mention Gen Z to me? I will, I will hold on to my eBay hope until I, I get a notification on email or whatever to say that eBay has unfortunately decided to shut down because of whatever reason. I just think that, and I say this again, I said it earlier and I'll say it again, if you work in commerce, a lot of the things that we take for just for granted, that's being, that's available to the masses, were first designed, um, on eBay. It was first available to the market via eBay. I'm not saying eBay is not they, they perfect and they, you know, they, they have all the opportunity in the world. I'm not saying that at all. I just, I'm, I'm, I'm not seeing any movement in the last 18 months that makes me believe that eBay has an idea of what this is. I say to you, and you wrote this on one of your magical, um, LinkedIn posts, and I said it to you in a a conversation privately the day before. It feels to me in 2025 that eBay has a caretaker manager in sports management situation. We are neither the future nor are we the past, but we can't move forward because if we move forward, we believe we might break the business. If we go any further back there's nothing really for us to talk about. So where are we? We are doing nothing and we are happy about doing nothing. And then, you know, you know, then you will tell me, you know, that they all, you know, they have so many listings, so many active users and all of that. And then it just, it's like this virtuous cycle of them just not knowing what to do. And let me just add They have had ample opportunity of making sure that the future is much better than the current iteration of eBay. I'm gonna just say it out loud because I saw— I worked with eBay talent. I worked for a company that believed that our senior management could only be from eBay, couldn't be from anybody else. Because eBay management knew about emerging markets, they knew about all kinds of stuff. That unfortunately has left the building. And sadly, on this episode 5, we need to talk about the next generation of marketplaces in our next episode because we have now done our duty our obligation to look at the past and give an honest— I wouldn't say it's an in-depth history of a company that's near and dear to the both of us, but I think we have done justice to one of the most important marketplaces ever created in e-commerce, because without them we would be nowhere. Liso, I see it.

Yeah, we probably wouldn't, but to use your football analogy or kind of sporting analogy, there was the Nottingham Forest football team in the UK who got relegated from the top tier of football under the stewardship of Brian Clough, who was famous throughout football at the time. And it was quite a heartbreaking watch to see the whole thing unfold over a season. Um, but during the season, one of the commentators said they're too big to go down. I wonder, will we look back in the, in the eons of time and look back now and say they weren't too big to go down? Hendrik, until our next outing on the Ostrich Report, I want to thank you for your time. Get some clothes on. There's no such thing as bad weather, there's just bad preparation. Get out and get for a walk, clear your head. You've been watching The Ostrich Report. Thanks, Hendrik.

Cheers, Vinny. Till next time, dude.

See you, my friend.