President and chief executive officer, eBay
Born: August 4, 1956, in Cold Spring Harbor, New York.
Education: Princeton University, BA, 1977; Harvard Business School, MBA, 1979.
Family: Married Griffith R. Harsh IV (neurosurgeon); children: two.
Career: Proctor & Gamble, 1979–1981, brand assistant, brand manager; Bain & Company, 1981–1989, consultant; Walt Disney Company, 1989–1992, senior vice president of marketing; Stride Rite Company, 1992–1995, division president; Florists' Transworld Delivery (FTD), 1995–1997, president and chief executive officer; Hasbro, 1997, general manager; eBay, 1998–, president and chief executive officer.
Awards: CEO of the Year, CBS/MarketWatch, 2003.
Address: eBay, 2125 Hamilton Avenue, San Jose, California 95125; http://www.ebay.com.
■ As president and CEO of eBay, Margaret (Meg) Whitman helped the company to become the leading consumer e-commerce site in the world. Whitman's extensive knowledge in brand building, combined with her knowledge of consumer technology, had a dramatic effect on the global market. In the process of transforming the way in which people buy and sell, Whitman became one of the wealthiest Internet CEOs in the United States.
Born in 1957 in Cold Spring Harbor, an affluent community located on the north shore of Long Island, New York, Meg Whitman was the youngest of three children. Her father was a businessman and her mother was a homemaker, whom Whitman later described as a free-spirited and adventurous soul. Because her father worked long hours and was often away
from home, Whitman and her siblings spent a great deal of time with their mother. When she was six, Whitman's mother and her three children joined a family friend and her five children for a three-month camping trip in Canada and Alaska. Whitman later recalled that when the children became restless and unruly, Whitman's mother made them all get out of the camper and run ahead while she followed close behind. Some times, passing truckers, seeing the children running, stopped to ask if the group needed help. In an interview Whitman ex plained how her mother "finally put a sign on the back of the camper that said "We're okay" ( New York Times , May 10, 1999).
In 1974 Whitman entered Princeton University thinking she wanted to pursue a career in medicine. After taking many of the required premed courses, however, she decided that medicine was not in her future. A summer spent selling advertising for a campus publication convinced Whitman to study economics. Her interest in business became so keen that she had the Wall Street Journal delivered daily to her dorm room. After graduating from Princeton in 1977, Whitman earned an MBA from Harvard Business School in 1979.
Whitman's employment history consisted of short but productive stints with many of the nation's top companies. Her first job was with the Proctor & Gamble Company in Cincinnati, where she worked as a brand assistant. By 1981, she had been promoted to brand manager. During her time with the company Whitman learned a great deal about marketing and brands. While with Proctor & Gamble, Whitman met and married Griffith R. Harsh IV, a neurosurgeon. In 1981, when Harsh took a residency position at the University of California at San Francisco, Whitman moved with him. She then took a position as vice president with the consulting firm of Bain & Company, where she worked for the next eight years.
In 1989 Whitman moved to the Walt Disney Corporation, where she served as a senior vice president of marketing at Disney's consumer-products division. During her tenure with Disney, Whitman was instrumental in helping the company move into publishing with the acquisition of Discover magazine. She also launched the first Disney store in Japan. Working for Disney enabled Whitman to understand how to run a business, knowledge that proved invaluable later on. In 1992 Whitman's husband accepted a position as codirector of the Brain Tumor Center at Massachusetts General Hospital in Boston. The family moved back east. Whitman accepted a position with Stride Rite, a children's shoe manufacturer, where she helped to revitalize the famous but moribund Keds line of sneakers.
Four years later, Whitman left the company to become CEO of Florists' Transworld Delivery (FTD), one of the world's largest floral-delivery companies in the world. The company was in the midst of severe fiscal crisis and fighting competition from new Internet florist services such as 1-800-Flowers and Florists.com. Whitman oversaw FTD's conversion from a money-losing, florist-owned cooperative to a profitable company, but not without encountering serious problems along the way. Continual infighting among her subordinates and employees and severe criticism from private florists about transforming the company from a cooperative to a privately held enterprise left Whitman feeling stifled, even as she brought the company back from the brink of financial ruin. In 1997 Whitman resigned, taking a position as general manager with Hasbro, one of the leading toy manufacturers in the United States. She headed the Playskool division, which marketed toys for toddlers and preschoolers. A year later a corporate headhunter approached Whitman about taking a job with an Internet start-up company located in Silicon Valley.
The fledgling company that approached Whitman was eBay, an online auction site. Begun in 1995, eBay was the brainchild of Pierre Omidyar, a computer programmer from San Jose, California. Omidyar launched the site as a means for his girlfriend, who collected Pez candy dispensers, to contact other collectors to buy, sell, and trade. The premise was simple: for a $3 fee paid to eBay, then called Auction Web, a seller could list an item for auction. Potential buyers could then bid on the item, with the highest bidder winning the auction. Omidyar's idea proved so successful that soon people were listing items other than Pez dispensers. The site also fostered a strong sense of community among those who participated. To prevent scams and fraud, Omidyar instituted message boards where buyers and sellers could rate each other. By 1997 the site was attracting more shoppers than any other site on the Web. The company began charging a 6 percent commission on all items listed and by 1998 had grown to 20 employees.
The company became too big for Omidyar to handle by himself, and so he sold a portion of it to the capital investment firm Benchmark Capital. Benchmark began looking for someone to supervise daily operations and direct the company's growth. According to Robert Kagle, one of Benchmark's partners and one of eBay's largest investors, it was essential to find someone who understood the technology, but more important was a person who understood the "emotional component of the customer experience in your gut" ( New York Times , May 10, 1999). Kagle also wanted someone who would transform eBay into a brand name. And so it was that the headhunter approached Whitman.
At first, Whitman refused even to consider the offer. She was overseeing six hundred employees at Hasbro, and she enjoyed her job. She also saw no reason to move her family to the West Coast. As she later stated in an interview, the idea of working for a "no-name Internet company" simply held no appeal for her (Salon.com, November 27, 2001). Kagle and the headhunter persisted, however, and finally Whitman agreed to meet with Omidyar at the eBay offices in San Jose. While there, Whitman took in the day-to-day operations of the company, even sneaking out of business meetings to monitor the online auctions. She also listened to eBay users, known as eBayers, who were enthusiastic about the company. It occurred to Whitman that eBay had tremendous potential. Already aware of the growing popularity of shopping on the Internet, Whitman agreed to consider the job offer. In March 1998, she joined eBay.
One of Whitman's first tasks was to make the eBay site more professional and more profitable. Omidyar also had made clear to her his desire to take the company public. But before Ebay could issue stock, Whitman advised that the company undergo substantial structural changes. Whitman walked a fine line between making the site more attractive to businesses without alienating those individual buyers who had helped the site to become a success. Until Whitman took over as CEO, the company had relied more on word-of-mouth advertising. She launched a national advertising campaign and created an anthropomorphic apple as the official eBay mascot. Whitman's ability to make quick decisions soon had eBay on the fast track.
One of her first personnel moves was to hire Brian Swette, head of marketing at Pepsi, to take charge of eBay's marketing division. She redid the Web-site graphics, making the designs brighter and separating firearm and pornography offerings into age-restricted areas. (eBay has since discontinued the sale of firearms along with alcohol, tobacco, drugs, and human organs.) In 1999 Whitman negotiated the purchase of Butterfield & Butterfield, a 134-year-old auction house in San Francisco that ranked a distant third behind more notable houses Sotheby's and Christies. With the purchase of Butterfield & Butterfield, eBay moved into the business of auctioning fine art and expensive collectibles. Still, Whitman's changes threatened to alienate smaller buyers and sellers who had played such an important role in building eBay.
While trying to court the small buyers and sellers, Whitman also pushed to expand the company's boundaries. She persuaded stores to sell on eBay, and began to offer specialty items under the eBay umbrella, a strategy she had developed at FTD. On September 24, 1998, eBay went public, with the initial public offering selling at $18 a share. By day's end, eBay stock closed at $47, an increase of 163 percent. Whitman was a millionaire. The initial public offering also thrust her into the limelight as the CEO of one the fastest-growing Internet companies in the world.
Thanks to Whitman's advertising and marketing strategies, the eBay customer base increased from 750,000 members to more than seven million by 1999. Whitman continued to tinker with the eBay formula. That year she instituted additional measures to protect eBay customers from fraudulent buyers and sellers by offering free insurance through Lloyd's of London. Any purchase up to $200 was guaranteed to the customer. Whitman also pledged to help law-enforcement agencies to identify and prosecute individuals, whether buyers or sellers, who attempted to defraud customers or the company. In addition, for a small fee, eBay offered a stamp of approval for sellers from Equifax, one of the nation's largest credit bureaus. Whitman thus took steps to improve eBay's overall reliability. Periodically plagued by technical problems that caused the site to be down for extended periods of time, Whitman hired Sun Microsystems to maintain the network, while improving the company's own technical support staff.
Among Whitman's greatest challenges was fighting off the competition from other Internet auction sites. Seeing the success of eBay, several popular Internet providers and commerce sites, such as America Online, amazon.com, and Yahoo, could have copied Whitman's formula and started their own online auctions, threatening to crush eBay during Whitman's early tenure. To prevent that from happening, Whitman extended the company's relationship with AOL, which, in turn, made eBay AOL's exclusive auction provider. The move was critical because it forestalled AOL from starting its own auction site and allowed Whitman to continue building the company. However, in 1998, Yahoo did begin offering free auctions in an attempt to lure customers away from eBay. Despite the challenge, Whitman held firm to maintaining eBay's fees for listing, which often discouraged sellers from offering less than desirable merchandise and thus provided a quality control that the Yahoo auctions could not match. Soon, megacommerce site amazon.com also jumped into the online-auction game, but by this time eBay had entrenched itself as the leading on-line-auction site. Still, there was something to be learned from Amazon and its abilities to handle large numbers of credit-card transactions. Whitman decided to buy Billpoint, an online system that allowed payments by e-mail, offering another enticement for prospective eBay buyers and sellers.
To help eBay move into other markets, Whitman also negotiated the purchase of Kruse International, a collectible car house, and Alando de AG, the largest online-auction house in Europe. By the end of the third quarter 1999, eBay reported sales of more than $741 million, up from just $195 million the year before. The company had also virtually cornered the online-auction business, accounting for 90 percent of all on-line-auction sales. Even though its earnings fell short of projections, the company managed to accomplish what many other high-profile Internet companies such as amazon.com could not: eBay made a profit.
Whitman credited much of eBay's success to its basic business model, which combined the elements of yard sales, newspaper classified ads, and auctions. This approach appealed to a wide spectrum of customers, from those who list yard-sale finds to large companies such as movie studios that auction off memorabilia to dealers who specialize in items from books to electronics and office equipment to collectibles and antiques. Whitman perfected the model: the company's role was simply to bring buyers and sellers together and to facilitate commerce. eBay carries no inventory nor does it ship items. The success of the site rests solely with its users. Though by auction-house standards the fees that eBay charges are low, often amounting to as little as 6 percent on each sale, almost all the monies generated are pure profit. As Whitman has pointed out, the eBay model works perfectly for Internet commerce geared as it is to high volume and low overhead. Although the business model has proven to be a gold mine, many analysts are quick to point out that eBay would likely not have succeeded had it not been for Whitman's efforts and expertise.
By listening to customers and responding to their needs, Whitman could tailor the site to meet the expectations of both buyers and sellers while ensuring a healthy profit for the company. During Whitman's first two years at the company, for example, the site was often plagued by power outages, sometimes lasting a day because the high volume of traffic overwhelmed the technology. Whitman's staff, and even Whitman herself, responded to customer queries and complaints by emailing or calling them directly and by refunding millions of dollars in fees. In creating the eBay brand name, Whitman built a fanatically loyal customer base, one that keeps growing by referrals from satisfied customers. This fidelity is crucial to the company's continued success, a reality that Whitman took so seriously that she had an expensive customer-service system created to respond to customer emails within 24 hours. eBay workshops, offered online and in person, provide information and help on how to make the most of the site. Message boards and calendars listed on the site itself offer an opportunity for buyers and sellers to connect. The company also helped charitable organizations with auctions to raise funds for various causes.
In creating this radically new approach to commerce, Whitman managed to expand eBay's base of operations without destroying the strong sense of community that the company fostered. But in steering the company to its phenomenal success, Whitman occasionally stumbled. When she cut back opportunities for users to post complaints on the site, many customers were enraged. After the terrorist attacks of September 11, 2001, Whitman organized a charity auction that critics called self-serving. The company also come under fire for allowing certain items, such as Nazi memorabilia, to be listed for sale, a policy that angered many in the Jewish community. However, Whitman pointed out that the primary purpose of eBay was to offer a forum where anyone could sell just about anything that was not prohibited by law, even though some listings might be offensive to certain individuals or groups.
Through the company's highs and lows, Whitman remained a steadying presence. Her colleagues found her hard working, dedicated, consistently upbeat, and relentlessly optimistic. She met problems head on and sought realistic solutions. At company headquarters in San Jose, she kept in close contact with employees, using a cubicle as an office and, on occasion, fielding phone calls and emails from customers. She avoided authoritarian management practices and never assumed that she knew everything. Indeed, one of Whitman's greatest strengths as a CEO was that she remained open to advice, criticism, and opportunity. As customers began to gravitate toward the fixed-price sales at Half.com as opposed to the more fluid auctions, for example, Whitman offered fixed-price sales on eBay through the option to "buy it now." She spent hours on the road promoting the company and talking to people. An ardent supporter of eBay and its philosophy, Whitman in one interview revealed that she was an avid customer, admitting that she had bought Beanie Babies, Pokemon cards, and even a car through eBay.
Whitman was ambitious as well. She guarded the company's reputation even as she sought continually to broaden eBay's reach in an effort to make the company a truly global enterprise. In 2001 Whitman acquired iBazar, an online-auction company with sites in eight European countries, and she also made inroads in New Zealand, South Korea, and other countries. In 2003 Whitman opened negotiations with EachNet in a bid to lure Chinese customers to eBay. Whitman's ability and willingness to listen to customers and employees led her to make decisions that industry analysts believe were critical to eBay's continued success. Whitman took the advice of customers when, in 2003, she acquired PayPal, an online checking and banking site, for $1.5 billion. At the same time, Whitman added new site categories and cleared the way for corporate purchasing departments to set up eBay accounts. eBay entered into an agreement with GE Business Credit Services that will provide financing to help small businesses deal with unexpected expenses and replace high-interest loans or retire credit-card debt. For Whitman, the Internet and e-commerce was the wave to the future, and she continued to work to ensure that eBay would serve its customers and remain a major force in the global marketplace.
See also entries on Bain & Company, eBay, Inc., Florists' Transworld Delivery, Inc., Hasbro, Inc., Proctor & Gamble Company, and Walt Disney Company in International Directory of Company Histories .
"CBS MarketWatch Names eBay's Meg Whitman as its First CEO of the Year," Business Wire , September 18, 2003, p. 56.
"Company Overview," eBay web site, June 10, 2004, http://pages.ebay.com/community/aboutebay/overview/management.html .
Fox, Loren, "Meg Whitman," Salon.com , November 27, 2001, http://dir.salon.com/people/bc/2001/11/27/whitman/index.html (June 9, 2004).
Hansell, Saul, "Meg Whitman and eBay, Net Survivors," New York Times , May 5, 2002.
Holson, Laura, "Defining the On-Line Chief; Ebay's Meg Whitman Explores Management, Web Style," The New York Times , May 10, 1999.
Ratigan, Dylan, and Becky Quick, "eBay: Pres. & CEO Interview," America's Intelligence Wire , April 21, 2004.
Taylor, Chris, "Meg Whitman: Host of eBay's Passionate Party," Time , April 26, 2004, p. 74.
Taylor, Neil, "EBay Bullish on Asian Growth: The Online Auction Company is Taking a Long-Term View of China Opportunities," Asia Africa Intelligence Wire , April 20, 2004.