In the olden days—before 2005—
Which was, of course, crazy. Make auctions easier and more profitable for eBay's customers, and more people will bid, buy, and sell—meaning lots more revenue for eBay, which takes a cut from every auction.
Now "we want [the developers] to make money," Max Mancini says. "When they grow their business, they also grow ours." Mancini, 40, heads eBay's Disruptive Innovation team, formed last summer, he says, to identify "things that take the company forward the next 10, 20 years." He knows such brainstorms can come from outside as well as inside company walls—which is why he oversees the eBay Developers Program.
Since eBay got rid of the fees, the number of third-party developers, just 300 back then, has soared more than a hundredfold. That indie force has created 4,200 programs, far more than eBay could have built itself. And the apps accounted for about a quarter of eBay's 2.4 billion listings last year.
"What that means is 45,000 software developers are thinking of ways to make it easier to use eBay," Mancini says. That's nearly four times the number of actual employees and a lot more brainpower applied to the challenge of fueling eBay's growth. Among other things, their tools adjust sellers' pricing, manage inventory, and tailor eBay to every imaginable niche market.
"EBay has gone from 'Are they threatening us?' to 'Wow, they're adding value. Let's support them,'" says Rodrigo Sales, cofounder and CEO of Vendio, one of the largest third-party developers in the eBay ecosystem. In fact, one of Mancini's most important roles is fostering the right environment for outside developers to innovate on eBay's behalf.
Communication is the critical piece. Mancini's group produces a Web site, a newsletter, a discussion forum, software tools, and a conference for the third-party crowd. It tries to steer creative disruption into areas that eBay is most eager to explore, such as social networking. It even promotes these outside products to eBay customers in a solutions directory, ranking them by customer feedback. When UnWired Buyer created a way to allow customers to bid easily over the phone, eBay incorporated the tool into every listing—and split the resulting fees with UnWired Buyer. Share the wealth: That's the quickest way to make outsiders feel like part of the gang.
A version of this article appeared in the May 2007 issue of Fast Company magazine.