During Meg Whitman’s decade at the helm of eBay, she transformed it from a tiny startup into a nearly $8 billion global powerhouse, revolutionizing the way goods are bought and sold online. In her new book, “The Power of Many,” Whitman reveals 10 core values that helped her achieve success and hold firm to her high standards of integrity and personal values. An excerpt.
Introduction: The first question
What is the right thing to do here?”
Looking back, I don’t think I would have had to ask the question if my team hadn’t been so exhausted. It was June 11, 1999, and I was walking down the hall at eBay when I saw and heard a noisy group of my senior staff in one of our conference rooms. It had been, to put it mildly, a rough day and a half, and most of us still looked like the walking wounded — gimlet-eyed, glum, both wired and tired from stress and coffee and lack of sleep. We had just experienced a twenty-two-hour system outage that had nearly propelled us to a prime spot on the list of the most spectacular business failures of all time. The crisis was far from over still. We had been publicly traded for only a short time but had a market capitalization larger than that of Sears, Roebuck — a fact one news commentator pointedly noted when he explained that our system shutdown was the equivalent of all the Sears stores in the country locking their doors simultaneously and admitting they didn’t know when they might reopen.
Our technical team had at last brought the system back up. Sort of. We’d finally been able to pull down the huge sheets of brown paper that we’d taped over the first- floor windows to avoid the hordes of camera crews from CNN and the local stations. Unfortunately, our system was still unstable, still crashing intermittently, still desperately in need of a thorough overhaul. The even worse reality was that we had thousands of frustrated and angry eBay community members. Our system crash had closed their doors as well.
I poked my head into the meeting room and asked what was going on. The group was discussing our service vice agreement with eBay sellers — those fine-print details that govern a transaction but which people tend not to read. One of the things spelled out in the fine print was that, under certain conditions, eBay would refund the listing fees on auctions that were disrupted by a system outage. At the time, eBay had more than 2 million active auctions. What did we owe those sellers? According to the agreement, we owed refunds only to the sellers in auctions scheduled to end during the period in which we were down. But we realized that all auctions, not just those scheduled to end during the outage, had been disrupted. The team figured that the difference between adhering to the letter of the agreement and offering a refund to every single seller could amount to almost $5 million — a significant number for a company whose total revenues the previous quarter were $34 million. A full refund to all sellers would mean we would miss our quarterly earnings projection, which could very easily cause Wall Street to lose confidence and the stock to plummet.
Listening to the conversation, it was clear to me that some voices in the group were trying to rationalize the smaller refund.
“What is the right thing to do here?” I asked, and then I left the room. Rajiv Dutta, who was in our finance group at the time and later became our chief financial officer, subsequently told me that the debate ended immediately. We would refund listing fees to all sellers who had active auctions when the site crashed. What’s more, we decided that going forward, we would refund fees anytime we had an outage that lasted more than two hours. We also sent a letter to our users that said, in part, “We know that you expect uninterrupted service from eBay. We believe that this is reasonable, and we know we haven’t lived up to your expectations.” And we apologized.
“People almost always know what they should do,” Rajiv recalls. “But sometimes they need the leadership to remind them.”
Now, this is a nice story, but it is not a story about the importance of always making the customer happy and worrying about the bottom line later. This is, after all, a book about success in both business and life. The reason I wanted to share this story is that while eBay’s stock price was unstable during this crisis, it did not collapse. After we explained our decision, Wall Street did not panic at the prospect of our missing our earnings targets as a result of the refund. Our users did not abandon us. Instead, and in part due to some other measures we took that I will talk about later in this book, we forged an even stronger bond of trust with our users all over the world, and a better working relationship with our technology partners. We vowed to fix our computer system, and in short order we did that, too.
I believe all this happened because we were a company that had made a clear and deliberate choice to behave according to a set of values.
In the course of the next decade, time and again I found that managing eBay by what might be called old-fashioned, basic values unleashed a remarkable twenty-first-century phenomenon — what I call the Power of Many. A Power of Many company or organization utilizes the communication and networking powers of modern technology to do things that otherwise would be impossible. But the point is to use technology not only to save costs and improve efficiencies but also as a way to engage the energy, ideas, and goodness of people, their desire to team up with others who share their interests and work together to make their own lives and life in general better. It demands a style of management and leadership that emphasizes communication and openness, and when difficult decisions loom, it demands that everybody consider this question: What is the right thing to do?
In retrospect, I have come to believe that all the career steps I took on my path to eBay prepared me to run and build what we became. From day one, I could see that eBay had all the ingredients of a great company at a remarkably young age. But I will not try to suggest that I had a true sense of the Power of Many when I agreed to take the job.
Early in my career, I worked as a management consultant. I was like a paratrooper, jumping into all manner of difficult and complicated situations in many kinds of companies — banks, cruise lines, high-tech instrument makers, beer companies, and airlines, to name a few. My job was to solve problems. As consultants, we were summoned to help companies that needed to forge a new strategy, reorganize after bad business decisions, or retool to more effectively battle the competition. Later, as an executive with a number of large corporations, including Disney and Hasbro, I worked with some of the most creative marketing minds in the country to develop new products and sell brands that millions of Americans use and rely on, even play with, every day. As the former head of Hasbro’s Preschool Division, I can even say that I was on a first-name basis with Mr. and Mrs. Potato Head.
But eBay demanded all the skills and experience I brought with me and more. The results wildly exceeded our expectations: we turned a tiny startup into a revolutionary economic engine that now provides a livelihood for people around the world and fuels tens of billions of dollars in transactions.
The “and more” part is what I want to talk about in this book.
There is a myth — at least I believe it’s a myth — that great success demands that we give up, or at least fudge, our relationship to what most of us recognize as decent, commonsense values. Honesty. Family. Community. Integrity. Generosity. Courage. Empathy. As we climb the corporate ladder, the myth tells us, we have to step on people, stretch the truth when it fits our agenda, and make heartless decisions based only on the bottom line. We are not supposed to ask what is the right thing to do, but rather what is best for our careers or to burnish our reputation.
I have never bought into that myth. I respect ambition, but not ruthless ambition. I watched the “greed is good” philosophy of the eighties play out, eventually landing some wheeler-dealer executives in prison. More recently, we’ve seen self-dealing and fraud undermine our entire economy. I’ve seen self-absorbed strivers trample colleagues to get ahead. But what I realized after ten years running eBay was that if eBay had been the kind of company where we held no core values and followed no ethical compass, where we treated our community members and each other like pawns or assets to be exploited, we never would have succeeded at all.
Many companies go through the exercise of creating a list of “corporate values,” invariably featuring platitudes such as “Always put the customer first.” Too often it doesn’t go much deeper than that. But just talking about values doesn’t mean anything. Not long after I joined eBay, the founder, Pierre Omidyar, said something that hit me like a two-ton truck. He said, “We don’t have to invent values. This community already has values. We need to align ourselves with their values or it’s not going to work.” Pierre sat down and wrote out what he thought those values were. They happened to deeply reflect his own personal values. From then on, eBay employee name badges carried these statements:
We believe people are basically good.
We recognize and respect everyone as a unique individual.
We believe everyone has something to contribute.
We encourage people to treat others the way they want to be treated.
We believe that an honest, open environment can bring out the best in people.
These values resonated deeply with me. They reflect the optimism and open- mindedness that I see in my most treasured friends.
They are the values I saw in my parents’ friends, who worked together, played together, volunteered together, prayed together, and treated one another with respect and compassion. There is nothing complicated or fancy about these values. But don’t mistake their hopefulness or simplicity for naïveté.
Values-focused management is not the only way to lead a company. There are many different approaches to motivating and empowering employees. Andy Grove successfully ran Intel for many years with the mantra “Only the paranoid survive.” Jack Welch became one of the nation’s most respected business leaders with an informal but highly combative style designed to break down bureaucracy and banish what he called “superficial congeniality.” Other successful organizations reflect the unique sensibilities of an iconic founder, such as Steve Jobs, Oprah Winfrey, or Michael Bloomberg.
But by the end of the twentieth century, the Internet had created entirely new possibilities. For the first time, businesspeople began to routinely talk about “transparency,” as the secrecy around certain kinds of transactions or activities fell away. Technology drove this: information that used to be difficult to obtain or communicate, or reserved for a chosen few, was suddenly available on every computer screen and could travel around the globe in seconds. It became easy to provide detailed information about products and services vices and invite users to share information and issues with one another. Investor chat rooms suddenly featured leaked memos and internal rumors about companies and pending deals.
This transparency not only accelerated the flow of information and streamlined many of the traditional relationships between businesses and their customers but also began to suggest entirely new kinds of business relationships. Almost single-handedly, for example, eBay created a global mechanism to value secondhand goods by creating transparency in what collectors were willing to pay for certain items. It leveled the playing field. A shrewd collector had to bid against other knowledgeable collectors in the open on eBay, even if the seller was not an expert in the true value of an item being listed. Sellers had to fully and accurately describe their items or risk negative feedback that would hurt their reputation and discourage future buyers.
What I came to believe at eBay was that, far from dehumanizing our interactions, technology, properly managed, can amplify our humanity in extraordinary ways. It actually can help a company connect more deeply with what its customers want and need and partner with its community in pursuing shared interests instead of just dictating terms. However, this is not just a function of clever software or powerful computers. To be effective in creating this kind of community, leaders need to approach the challenge with optimism, openness, discipline, and courage. They need to use technology to institutionalize listening and enfranchising. Doing this can be noisy, even a little chaotic at times. As we learned at eBay, you will never please everyone. But if you are cynical or dishonest about your values, you will be exposed. In fact, when you start down this path, you need to realize that your stumbles and missteps, even some of your soul- searching, will occur out in the open, for all to see. That is the reality of transparency. Private e-mails become public. Customers post angry complaints. Competitors can move quickly to exploit any perceived weakness. But if you follow an ethical and true course, you can unleash what I call the Power of Many. From the start, Pierre saw the connection between managing by shared values and creating trust within the community of eBay users. He exquisitely understood the extraordinary potential of a community that aligned and pulled together. The business challenge was to show that community that we intended to empower them, not exploit them, and that together we could all be successful.
We gave eBay users tools, structure, and minimal rules, and we tried to stay out of the way. That is why I have always said that we did not build eBay; our community of users did. As managers, we held ourselves accountable to deliver on our promises — to our investors and to our customers. We trusted our users to figure out the best way to use our services vices and to tell us how to improve our offerings. Ultimately, eBay developed because millions of people bought into the idea that they could trust each other. They came to take for granted that they could find a stranger with something they wanted to buy and conduct a satisfying transaction that benefited each of them. And those of us managing eBay believed we could build loyalty by actually listening to our customers and seeking their involvement.
That shared covenant is what ultimately propelled us far beyond where any of us initially dreamed of going.
The idea that our success would hinge on this shared covenant was not obvious at the time. We took a lot of heat from outside eBay for the emphasis we put on our values. People said they seemed like utopian ideals, not business values. Manage by asking what is the right thing to do? How naive, critics sniped. “That’s nice, but what about your numbers?” asked some investors.
Well, we also had other values that were equally important. At the top of the list was the conviction that results matter. We knew that we needed to deliver on what we said we’d deliver. We vowed to be frugal and treat shareholder resources as something to be conserved for the best possible use. We made it a habit to constantly take stock and jettison projects that were interfering with our core focus. I had relied on these values throughout my training and career in business, and they were just as non-negotiable as the ones Pierre had established. What seems to surprise people is that these two sets of values — the hard- nosed business values and the “softer,” ethical values — were complementary.
I believe eBay’s success proved that values are not abstract ideals but essential tools. What strikes me most deeply as I reflect on my ten years at eBay is that both sets of values were as relevant and useful to me when I took over a $4 million company with thirty employees as they were on the day I retired from eBay in 2008, when we had grown to a nearly $8 billion company with 15,000 employees around the world. At that point, more than 1 million people who were not employed by eBay made most of, if not all of, their living selling in our marketplace. Time and again people would come up to me and say, “eBay changed my life.” The company helped people be successful doing something they loved, and sometimes it even empowered individuals with disabilities who simply could not do in the land-based world what they could do in the eBay marketplace — compete on an even footing.
What I came to believe at eBay was that, far from dehumanizing our interactions, technology, properly managed, can amplify our humanity in extraordinary ways. It actually can help a company connect more deeply with what its customers want and need and partner with its community in pursuing shared interests instead of just dictating terms. However, this is not just a function of clever software or powerful computers. To be effective in creating this kind of community, leaders need to approach the challenge with optimism, openness, discipline, and courage. They need to use technology to institutionalize listening and enfranchising. Doing this can be noisy, even a little chaotic at times. As we learned at eBay, you will never please everyone. But if you are cynical or dishonest about your values, you will be exposed. In fact, when you start down this path, you need to realize that your stumbles and missteps, even some of your soul-searching, will occur out in the open, for all to see. That is the reality of transparency. Private e-mails become public. Customers post angry complaints. Competitors can move quickly to exploit any perceived weakness. But if you follow an ethical and true course, you can unleash what I call the Power of Many. From the start, Pierre saw the connection between managing by shared values and creating trust within the community of eBay users. He exquisitely understood the extraordinary potential of a community that aligned and pulled together. The business challenge was to show that community that we intended to empower them, not exploit them, and that together we could all be successful.
We gave eBay users tools, structure, and minimal rules, and we tried to stay out of the way. That is why I have always said that we did not build eBay; our community of users did. As managers, we held ourselves accountable to deliver on our promises — to our investors and to our customers. We trusted our users to figure out the best way to use our services vices and to tell us how to improve our offerings. Ultimately, eBay developed because millions of people bought into the idea that they could trust each other. They came to take for granted that they could find a stranger with something they wanted to buy and conduct a satisfying transaction that benefited each of them. And those of us managing eBay believed we could build loyalty by actually listening to our customers and seeking their involvement.
That shared covenant is what ultimately propelled us far beyond where any of us initially dreamed of going.
The idea that our success would hinge on this shared covenant was not obvious at the time. We took a lot of heat from outside eBay for the emphasis we put on our values. People said they seemed like utopian ideals, not business values. Manage by asking what is the right thing to do? How naive, critics sniped. “That’s nice, but what about your numbers?” asked some investors.
Well, we also had other values that were equally important. At the top of the list was the conviction that results matter. We knew that we needed to deliver on what we said we’d deliver. We vowed to be frugal and treat shareholder resources as something to be conserved for the best possible use. We made it a habit to constantly take stock and jettison projects that were interfering with our core focus. I had relied on these values throughout my training and career in business, and they were just as non-negotiable as the ones Pierre had established. What seems to surprise people is that these two sets of values — the hard-nosed business values and the “softer,” ethical values — were complementary.
I believe eBay’s success proved that values are not abstract ideals but essential tools. What strikes me most deeply as I reflect on my ten years at eBay is that both sets of values were as relevant and useful to me when I took over a $4 million company with thirty employees as they were on the day I retired from eBay in 2008, when we had grown to a nearly $8 billion company with 15,000 employees around the world. At that point, more than 1 million people who were not employed by eBay made most of, if not all of, their living selling in our marketplace. Time and again people would come up to me and say, “eBay changed my life.” The company helped people be successful doing something they loved, and sometimes it even empowered individuals with disabilities who simply could not do in the land- based world what they could do in the eBay marketplace — compete on an even footing.
eBay was a unique place where many ideas and constituencies and dynamics converged. Today, across the landscape of business, more and more companies are talking about the importance of using the Internet to build a community, not just a customer base, whether they are selling hybrid automobiles, pharmaceuticals, gardening tools, or even diapers. Apple was once a fiercely independent boutique; today, by enfranchising thousands of outside application developers it has created an incredibly dynamic and powerful innovation engine. Members of its larger community have developed tens of thousands of applications for the iPhone. That is a classic Power of Many endeavor. In the best of these communities, you will find people who are basically good, working together in areas of shared interest, listening to one another, but also looking to create meaningful products and services vices with tangible value.
We faced many different kinds of challenges, and the path was not always smooth, but our performance and our reputation as a company of decent, good people who tried not only to be effective in delivering business results but also to be responsible citizens of both their eBay and real-world communities was something I was deeply proud of.
I began to ask a bigger question: If these guiding principles worked so well for eBay, shouldn’t they work for other challenges in or beyond business? Don’t we crave a government we can be proud of and feel part of, one that empowers us but also one that gets out of the way so we can innovate and invent our own futures? Don’t most of us feel that people are basically good, that they step forward in difficult times with great courage and come up with new ideas that make all of our lives better? Shouldn’t we make it easier for those ideas to see the light of day?
I’m writing this book in part because I believe that we have the opportunity today to use these values to help us reinvent our future during a time of great stress and economic anxiety. There are those who see a focus on values as a luxury for prosperous times when we can “afford” to sit back and think about making the world a kinder or nobler place. I want to make a different argument: that it is precisely during difficult times that we need to take a step back and align our priorities and actions with the fundamental principles that ultimately create stability, efficiency, energy, and even prosperity. Navigating by essential values can have a force multiplying effect.
I don’t recall a time in my life that we as a nation have so needed to tap the Power of Many. I believe the eBay experience vividly shows that businesses will best prosper by inviting customers and partners into their thinking and decision-making processes. Technology advances are giving us ever more exciting and powerful ways to do that, and to amplify the power of the communities that result. Combined with a values-based approach to management, this is a new model for success with lessons that go beyond business.
Excerpted with permission from “The Power of Many: Values for Success in Business and in Life” by Meg Whitman and Joan O’C Hamilton (Crown Publishing, 2010).