In 1997 a renowned corporate scout approached marketing whiz Margaret (Meg) Whitman to work for an unknown "online auction community."Whitman was recruited to eBay after a blue chip background at Hasbro, Disney, and Bain & Co. Whitman herself couldn't believe she'd relocate her family across the country to work for the fledgling, black–and–white auction site with 19 employees, but eventually she realized eBay's real potential. Whitman turned eBay from a relatively successful Internet start–up into one of the only profitable Internet companies. Less than two years after taking on eBay, she became the first female Internet billionaire.
Meg Whitman lives with her husband, Griffith R. Harsh IV, a neurosurgeon at Stanford University. They have two sons, ages 13 and 16, and enjoy fly–fishing in their spare time. The family frequently travels to her husband's family farm in Sweetwater, Tennessee. Whitman, who has traded Beanie Babies and Pokemon cards with her children on eBay, named her Burger King Mr. Potato Head as her most treasured collectible. Whitman was named to the board of directors of Goldman Sachs, a leading global investment banking and securities firm.
Whitman was born in Cold Spring Harbor on the north shore of Long Island, New York, in 1957. She is the youngest child of a businessman and an adventurous homemaker. When she was six, Whitman's mother packed her and her siblings into a camper along with a family friend with five children of her own and took them on a three–month camping excursion through Canada to Alaska. When the kids got unruly, Whitman's mom made them get out and run ahead of the camper, while she trailed them until they got tired. Occasionally, truckers would ask if anything was wrong. "We finally put a sign on the back of the camper that said, 'We're O.K.,'" Whitman related to Laura M. Holson in the New York Times.
In 1977 Whitman graduated from New Jersey's Princeton University with a degree in economics. Originally a pre–med major at Princeton, Whitman told Fast Company, "I took calculus, chemistry, and physics my first year. I survived. But I didn't enjoy it. Of course, chemistry, calculus, and physics have nothing to do with being a doctor, but if you're 17 years old, you think, This is what being a doctor is going to be about. After that, I had to find something else to do. I began selling advertising for a magazine that was published by Princeton undergrads. It was more fun than physics."She then obtained a master's degree in business administration from Harvard University in 1979. Out of school, she landed a job as a brand assistant with Proctor & Gamble in Cincinnati, Ohio, and worked her way up to brand manager. In 1981 Whitman moved to San Francisco when her husband, a neurosurgeon, began a residency at the University of California. Whitman then found work as a consultant for Bain & Company, where she stayed for the next eight years.
In 1989 Whitman became senior vice president of marketing at the Walt Disney Company, where she helped the firm acquire Discover magazine. After her husband took a new position as codirector of the brain tumor program at Massachusetts General Hospital in Boston in 1992, she accepted a job as president of Stride Rite Shoes in Lexington, Massachusetts. This children's shoe manufacturer also produces Sperry topsiders and Keds sneakers. In 1995 she left that post to become CEO of Florists'Transworld Delivery (FTD), an alliance of commercial florists. There, she faced the challenge of transforming it to a privately held company. This met with much resistance from higher–ups, and in addition, the federation was facing new competition from Internet floral delivery services.
In 1997 Whitman changed jobs again to go to Hasbro, Inc., one of the largest toy and game manufacturers in America. She was hired as general manager of the Playskool division, the profitable umbrella under which many of the firm's best–known toys reside, including Mr. Potato Head and the Teletubbies. She would not stay there long, though. In November of 1997, a headhunter told Whitman about a job with an Internet start–up in Silicon Valley. Reluctant to uproot her husband and two sons, she turned down the suggestion. However, after visiting the offices of online auction site eBay in San Jose, she packed up and headed West in February of 1998. "There's no substitute in the land–based world for eBay," she remarked to Kathleen Melymuka in Computerworld. "I just had an overwhelming instinct that this thing was going to be huge."
eBay was launched in September 1995 by Pierre Omidyar, a computer programmer in San Jose, California, as a way for his girlfriend, a Pez candy dispenser collector, to find other collectors to buy and sell to. The eBay premise: For a $3.00 fee to eBay, a seller describes an item and sets a minimum bid; then buyers have opportunities to outbid each other until the auction expires, with the item going to the highest bidder. eBay later started taking an average 6 percent commission. Visitors to the site became known as "eBayers," and by 1997 eBayers were spending more time on eBay than the average shopper on any other site. The company became too big to handle, so Omidyar sold part of the company to a capital investment firm, who in turn hired Whitman.
Whitman took charge of eBay and started making changes to the company in the interest of profitability. "EBay comes from the roots of an open, sort of libertarian, point of view," she said in Fortune. She almost immediately launched an advertising plan for eBay, which up to then had grown only by word of mouth. She then initiated eBay's purchase of Butterfield & Butterfield, a 134–year–old traditional auction house in San Francisco, to add to eBay's profits. In September 1998 she took eBay "public," selling 6.5 million shares to the public in the stock market, which also increased the company's worth.
When Whitman joined eBay as CEO in 1998, she was given options to buy 14.4 million shares of company stock at pennies per share. She chose to exercise these options exactly one month after joining the company and ended up realizing a paper profit of $42.7 million—the difference between her share option price and the proposed IPO stock price—when she took the company public some six months later. But she made her real money later when she sold all 1.8 million shares that vested March 1, 1999—600,000 in 1999 and 1.2 million in 2000—at prices of between $55 and $171.
Some investors chose to interpret Whitman's readiness to cash in on her eBay stock options as a demonstration of lack of faith in her company, but others, noting that cash compensations for dotcom CEOs tend to be very meager, argued that a certain amount of cashing out was to be expected. Meanwhile, Forbes reported in October 2000 that Whitman's salary had risen by 37 percent in 2000, but that she had suffered a paper loss of $900 million during the dotcom shakeout of the previous year.
Although UCLA (University of California at Los Angeles)sociology professor Peter Kollock told Fortune that he considered auction fraud a small problem, the National Consumers League's Internet Fraud Watch rated auction fraud the No. 1 problem on the Web, according to Fortune. Whitman even had to pay the difference, when a live charity auction was held on the Today show and fraudulent bidders drove the price of a jacket up to $200,000 (the highest legitimate bid was only $11,400). To combat the problem, Whitman initiated a "comprehensive trust and safety program" at eBay. It granted eBayers insurance options and the opportunity to have their identity verified by a credit–rating firm. "We have a real corporate feeling that our users need to be treated with respect...," she told the National Press Club in 1999.
There were also occasions when technical glitches caused eBay to shut down. In August of 2000 eBay had to switch to backup servers after auctions were stopped for 35 minutes. But in 1999 the site was down for 22 hours due to a system crash. Tens of thousands of outraged eBayers flooded the site's support board with messages. Whitman responded by closing the board completely, a decision for which eBay was criticized. "There was a joke going around: 'I guess there are no more problems at eBay,'" Scott Samuel, president of Honesty Communications, which measures traffic on online auctions, told Fortune. "These are your customers—you don't do that."
Still, in 2001, when most dotcoms were sitting in the doldrums, eBay was making money hand over fist. The company's profits for 2000 had risen nearly 400 percent, to $48.3 million, while registered users rose 125 percent, to 22.4 million. And although eBay's stock price suffered like every other Net stock in 2000, by early 2001, its shares were up 30 percent, unlike those of Amazon, Yahoo, and AOL.
Chronology: Margaret Whitman
1977: Earned B.A. in economics, Princeton University.
1979: Graduated with M.B.A. from Harvard Business School.
1979: Became brand assistant at Proctor & Gamble.
1981: Made vice president at Bain & Co.
1989: Named vice president of Marketing at Walt Disney Company.
1992: Took position as President of Stride Right.
1995: Became president and CEO of FTD.
1997: Worked as general manager of Preschool Division at Hasbro, Inc.
1998: Named president and CEO of eBay, Inc.
Social and Economic Impact
Ebay's top auctioneer Meg Whitman is a Silicon Valley superpower, helping build eBay from trading Pez dispensers to a $5 billion dollar behemoth. With 34 million registered users, eBay is the world's largest online marketplace for sales of goods and services by a varied community of businesses and individuals. It handles 79 million transactions per quarter and lists more than 5 million items.
Somehow, eBay managed to escape the dotcom downturn, coming out ahead in its second quarter projections for 2001, and according to Forrester Research, it could become a $52 billion dollar industry by 2002. Meg Whitman, who owns about 4 percent of the company she runs, is a multibillionaire and one of the world's wealthiest women CEOs.
Showing that eBay also has a philanthropic side, eBay began the Auction for America after the terrorist attacks on New York and Washington in September 2001, which allowed sellers to list items free of charge, and upon the sale of an item, 100 percent of its value goes to the September 11th Fund. Ebay's goal is to raise $100 million in 100 days, which, coincidentally, ends on December 25th, 2001. Some of the items auctioned have been donated by such public figures as New York Governor Pataki, who put up a picture of himself and Joe DiMaggio after the Yankees had won the World Series, and Andre Agassi, who has a signed tennis racket. Also up for auction is a U.S. flag that flew at the Capitol, signed by every member of Congress. "So we've got musicians, singers, congressmen, politicians, and then every average American. A mom has started a virtual lemonade stand on Auction for America, auctioning off virtual cups of lemonade, and her daughter's artwork," Whitman added in an interview by FoxNews.com.
Sources of Information
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Forbes, 26 July 1999; 9 October 2000.
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