Ebay Case Meg Whitman

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In 1995, Pierre Omidyar founded eBay, an on-line company whose purpose was to facilitate an environment where people could not only exchange goods, but also have discussions, make connections, and form relationships. He carefully crafted a culture based upon, “trust, respect, autonomy, empowerment, and equality,” and sought for the eBay community and company to be reflective of those principles. eBay was successful because Omidyar realized that a respectful, symbiotic relationship with this on-line community was critical, “because eBay wouldn’t exist if it weren’t for [the] community.” In 1998, Meg Whitman was brought in as CEO to strengthen the eBay brand and to develop a stronger marketing strategy. In this, she was remarkably successful. In little over a year, eBay registrants grew from 88,000 to 3.8 million users. The company successfully went public, revenue just about doubled every quarter, and acquisitions and partnerships were made to increase the customer base. However, the rapid growth under Whitman caused a major problem for eBay: it put a strain on the culture and the community upon which eBay was successfully founded. With growth came the need for more rules and policies. For instance, Whitman made the decision to ban the sale of firearms to keep the company free of legal liabilities. Many in the community and company were shocked and outraged by this policy because it violated the eBay values of open communication and trust. Also, the acquisition of Butterfield and Butterfield, a prestigious, high-end auction house, was taken as a slap in the face. It violated the eBay value of respect, and the community saw this purchase indicative of the company’s priorities being focused on higher profit margins, not building and maintaining relationships with its existing community. There are clear reasons why the eBay community felt its culture was being left behind in the wake of rapid growth. First, the strategic design of eBay dramatically changed...
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