eBay CEO: Tech companies want to stay hot forever, but that doesn't happen

eBay's CEO reflects on some of the hard truths that he had to address in revamping the online auction house for the cloud-based and mobile world.
Written by Rachel King, Contributor

SAN FRANCISCO -- Technology companies wish they could stay hot forever, but that just doesn't happen, according to eBay CEO John Donahoe.

On CNET: eBay CEO: Paying for things is about to get a lot easier

Sitting down for a fireside chat at BoxWorks 2012 with Marc Andreessen, co-founder and general partner at venture capital firm Andreessen Horowitz, Donahoe reflected on his role over the last few years at eBay and how he has attempted to revamp the online auction house.

Andreessen cited that eBay stock has increased fivefold during Donahoe's tenure, and eBay has grown to be a $62 billion market-cap company.
When Donahoe signed on as CEO in 2008, he reflected on Tuesday morning that he wanted eBay to have an impact over decades, building an enduring company that lives out its mission over decades -- not the first five to 10 years.
"The pace of change and the pace of innovation is accelerating," said Donahoe. "That pace has been a surprise, but it's very real, and it means we've got to innovate and change at a pace that is continuous."
Donahoe explained that, at the same time, it's vital that leaders keep the basic fundamentals of business, such as being customer-focused and building a strong team, in mind -- regardless of how technology evolves.
"One of the blessings and curse of a successful Internet company is you get big," Donahoe said. "The balance of those two things is what makes it fun and what makes it interesting."
Donahoe said that eBay had "the classic innovator's dilemma," explaining that it has been very successful, but the company hadn't innovated as much as the competition.
Thus, Donahoe described a few of the mantras he had when it came to rehauling eBay. Those included telling the truth and accepting being unpopular while making aggressive changes as well as admitting that you can't change the culture unless you change the people.
"It was brutal. It was hard. But it was necessary and needed," Donahoe reflected, citing that eBay changed everything from the user experience to pricing to policies -- basically "almost everything about the eBay experience."
There is arguably one area where eBay was already ahead of the competition, based on Donahoe's comments.
"Our very business models have been cloud-based. They weren't called cloud-based in the beginning, but that's what they were," Donahoe asserted about both eBay and PayPal. The chief executive cited that there are roughly 100 million active digital PayPal wallets in the cloud, which are fully encrypted and can be accessed from virtually any device.
Andreessen, who is also a member of eBay's board of directors, praised Donahoe's leadership at eBay, which has included the evolution of the online retail's giant major shift towards mobile with the X.commerce platform, which revolve heavily around new mobile solutions for PayPal. Andreessen also defended eBay's sale of Skype to Microsoft for $8.5 billion.
Some of eBay's acquisitions during Donahoe's time as CEO include BillMeLater and GSI as well as smaller ones such as Milo and RedLaser.
Donahoe also mentioned that eBay has had 15 acquisitions during the last year, asserting that it's not just the technology that eBay was interested in but also the founders and talent at those startups.
"There are not a lot of technology companies that are successful in a post-founder environment," Donahoe continued, adding the challenge then is figuring out, "How do you get that magic alchemy that founders and startups really breed, especially in the consumer Internet?"

"You have to really understand the core values of the company and the core values the founder created," Donahoe said. But he also remarked that you have to be ruthlessly objective and realistic about the industry landscape now and down the line, adding you have to embrace change in a continuous way.
Donahoe argued, "Innovation doesn't respect hierarchy. In fact, it's the opposite of hierarchy."

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