The Book Club

Ending With Aristotle

Dear Andrew and David:

Andrew C., point well-taken about Omidyar and Cohen pushing what is basically a very successful business a little too hard as community, religion, or otherwise spiritual. On the other hand, since community was one of the key elements to staving off well-funded competition (the other being what David calls “good karma”), one can understand a certain romanticizing of the early days in the eBay forums (and I don’t claim to know to what extent, I’ve learned to take online communication more seriously this week).

As you suggest, the willingness of users to hang around in “the eBay Cafe” helped give eBay what it needed most: auction listings. Because the actual technology and the business model behind eBay are fairly easy to duplicate, the community was crucial for allowing the company to gain “first-mover advantage”—to become the first entrant into the market. Many people came to eBay because they liked chatting with online acquaintances in addition to the fact that the site had the most auctions. These two factors then reinforced each other in a self-feeding cycle, or “network effect.”

While I certainly don’t want to come down too hard on the eBaysians (and Cohen) for the impulse to use the company’s wealth to alleviate poverty around the globe, I share David G.’s skepticism about the accounts of the Guatemalan development project. Those portions of the book were most reminiscent of the irrationally exuberant Internet reporting that we’ve learned to distrust.

While a sophisticated debate on searching for a balance between economic development and humane values requires more knowledgeable minds than my own, I can confidently say that underwriting what is effectively an eBay sales center in a Guatemalan village with one phone line and an “often unreliable mail system” is of questionable help at best.

Cohen also raises my English teacher hackles, in claiming that Internet access could transform the San Pedrans’ school library and its “single wall of books” into “a place of limitless information.” The notion that the children of San Pedro la Laguna don’t need real books because they’ll get on the town’s one open line to read e-algebra texts strikes me as utopian, in the bad sense of that term.

On the last page of the book, there’s a brief mention of CEO Whitman redirecting charitable strategy toward micro-lending and an alliance with a third-party nonprofit called Peoplink [sic]. But if the company is still in an experimental stage with these efforts, it seems misleading and trivializing to give eBay reselling much credit for making headway with such a massive problem.

Despite these objections, I came out with a real respect for the founding of eBay and for Cohen’s colorful account. After spending the late ‘90s seeing business terms like “disintermediation,” “first-mover advantage,” and “network effect” used to justify the most outrageous propositions (I myself believed that pigs could fly at one point), it’s refreshing to read about an Internet startup with an idea that worked. Eliminate the middleman, develop the listings and reputation fast, and trust your “basically good” customers to handle fulfillment. Who’d a thunk it? Not me, but not a lot of venture capitalists, either.

Your erudite signoffs have exhausted my off-the-cuff Hobbes repertoire, so you’ll have to settle for Aristotle: “For in the case of human beings what seems to count as living together is this sharing of conversation and thought, not sharing the same pasture, as in the case of grazing animals.” If you accept his definition, the Internet can promote a kind of community. In any case, I’ve found our conversations this week to be energetic, substantive, and highly enjoyable.

Best wishes to you both,