eBay, myths and the bottom-up economy

August 19, 2005

eBay’s origins as a site built by Pierre Omidyar so his fiance could trade Pez dispensers is well known. It’s old news, but I learned last night that this is actually a brilliant PR myth created by Mary Lou Song.

Myths, stories and legends are vital for company culture and to create a mystic that attracts outsiders. The eBay myth is an inspiring example of how a good story (true or false) can connect a company with its customers in a very real way.

eBay is an expert at understanding the importance of customer relationships on their business, they embody the bottom-up economy:

In the bottom-up economy, presuming you know what the customer wants is the ultimate error. Prahalad and Ramaswamy instead call for “co-creation of value”: The successful products and services from now on will be those developed jointly – company and customer working hand in hand.

To Pierre Omidyar all that sounds very familiar. As the founder of eBay, he is the Adam Smith of the Bottom-Up Economy. From the beginning, eBay set out to level the playing field between big and small.

Says he: “At eBay the managers don’t control the brand or the customer experience – our customers themselves do.”

Scary. But then, eBay’s $42 billion market cap suggests that the benefits of working bottom-up make it worth the risks.

Note: Originally published to my Synop blog on March 8, 2004.