eBay CEO discusses mobile, customer feedback and embracing competition

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DonahoeWhen John Donahoe took the reins at eBay 18 months ago, he acknowledged in a keynote at Shop.org’s Summit this morning that the company had a problem. “eBay had a history where it had phenomenal, white-hot success very early on in its life, but one of the dark sides of that is we were not as outside-in as we needed to be,” he said. “I just finally acknowledged what everyone knew: eBay’s user experience hadn’t really kept up.”

So Donahoe chose to hone in the company on two goals: being “very good at e-commerce in a marketplace format” and being “the best in the world at online payments.” As a result, Donahoe said eBay’s platform is currently one of the two areas where the company is investing. He referenced the iPhone, a platform on which thousands of applications have been built. Much like the iPhone, Donahoe said, “we’re going to open up our platform to dramatically increase innovation. We will build that robust, scalable infrastructure and we’re going to allow innovation to be built on top.”

Donahoe also said the company is focusing on mobile, which he said is having “a powerful impact on commerce and payments.” Four million people have downloaded eBay’s iPhone app, and the company will see $380 million in sales come through the iPhone within the first nine months of this year. And it’s not just bids on used books and kids’ clothing: earlier this year, someone bought a Lamborghini with the app and last month a shopper used their iPhone to purchase a $150,000 boat.

Instead of focusing on keeping the competition at bay, Donahoe said he has changed his way of thinking because it “stifles innovation.” He mentioned TwitPay, an idea he acknowledges the company wouldn’t have thought of, which links to PayPal and enables people to send money to anyone else on Twitter. He also discussed several Facebook applications which use PayPal to allow people to raise money for charities. “On the surface, this could threaten our business,” he said. “But in reality, it will unleash innovation.”

Donahoe said this will be a mission of the company going forward. “When we see things that threaten us, we’re going to embrace them instead of resist them,” he said. “Every temptation in the world is to resist things. Consumers are driving a lot of change and we’ve found ourselves better off if we learn how to take advantage of them.”

What eBay is not focusing on, he said, is retail. Calling eBay “the online outlet mall,” Donahoe assured retailers that eBay was not interested in going into the retail business and hopes merchants see eBay as an outlet for liquidated merchandise, overstocks, returns from stores, and discontinued items. Three times during his keynote (I counted), Donahoe used the phrase, “We are not a retailer.”

“The focus is to be the best marketplace,” he said. “We are not a retailer and we will never be a retailer. We’re going to be a marketplace that will not compete with its sellers.”

But, like retailers with a passionate customer base, Donahoe recognized that it is impossible to please all of the company’s 300 million customers. Likening his position to the mayor of a city (“the feedback never agrees with one another”), Donahoe called customer feedback “a gift” and said the company is listening to that feedback and making decisions that are the bet for the marketplace. “The passion our sellers feel is a blessing,” he said. “The minute they stop caring and screaming is the minute we should be concerned. We’ve tried to be much more genuine and authentic about listening to that feedback.”

And he means it: Donahoe is so serious about customer feedback that he uses a net promoter score to measure engagement and ties those scores to the compensation of senior management.

Why the honed-in focus on customers? Certainly unhappy eBay sellers could jump ship for another marketplace through Amazon or Wal-Mart, but that’s just one piece of the puzzle. Donahoe said listening to customer feedback is important because that’s where the company gets its best ideas.

“Most good innovation comes from customers,” he said. “The more time we spend thnking in the ivory tower in San Jose, the worse off we’re going to be.”

One of the company’s newest programs, PayPal Student Accounts, actually stemmed from continued frustrations among customers who wanted family accounts. Today, Donahoe uses PayPal Student Accounts in his own household – his kids’ allowance is automatically deposited monthly, he said – and the program is filling an unmet need in other families simply because the company listened to its customers.

When discussing company growth, Donahoe reiterated that he plans to focus on what the company is (“a technology platform”) and pay close attention to customer feedback. “The only thing we can try to do is serve customers’ needs,” he said. “We need to find those pain points and either solve them ourselves or enable them to be solved.” Proof that, even though eBay may not be a retailer, they certainly have several things in common.

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