Power Partners

Seeing the Web Through eBay's Eyes

What happens when two CEOs announce a daring idea for a joint project -- and then leave the hard work of implementation to a few frontline managers? That's a make-or-break challenge for any alliance. It gets even tougher in an Internet alliance, when one partner has more than a century of tradition built around trust, while the other is 5 years old and says that its core value is "fun."

Michelle Banaugh and Janet Crane can smile now. In March, Wells Fargo CEO Richard Kovacevich and eBay CEO Meg Whitman announced a project to create all sorts of ways for consumers to move money over the Internet. Almost immediately, the baton was passed to Banaugh, 39, and Crane, 46, who became chief managers at Wells Fargo and eBay, respectively, in charge of making the new payment system actually happen. Gradually, the two women figured out how to get their teams to work together and how to create a reliable service on the Internet. They pack- aged their offerings under the catchy, 18-month-old name Billpoint and devised a plan to take the mass-consumer market by storm.

But it wasn't always easy. Take, for example, something as simple as employee-security issues. Wells Fargo security officials proposed that all eBay employees working on Billpoint submit to standard banking scrutiny. "Fine," said their eBay counterparts, not quite aware of what they had just agreed to. Within days, the Wells Fargo security team started drafting forms asking everyone on the Billpoint project to undergo background checks that would be forwarded to the FBI.

Sputters of disbelief ensued. FBI-level inspection might be appropriate for bank tellers, but not for the freewheeling eBay culture. People who worked at eBay shared a libertarian ethos that made them instantly opposed to having any authority vet their personal lives. Besides, at least one of eBay's young executives had been arrested in a college protest. He might not pass an FBI background check.

The moment that Banaugh heard about eBay's shock over the request, she realized that the security issue had been handled poorly. What Wells Fargo needed was the ability to assure the Office of the Comptroller of the Currency (OCC) that everyone performing banking functions had undergone a review. The answer: Banking functions would be performed only by Wells Fargo employees, who had already been checked out.

As other friction points arose, though, Banaugh proved that she was no pushover. The two companies started out with different ideas about how to do quality assurance on software. In eBay's world, quality-assurance reviewers worked alongside the developers themselves in what often became a cordial, chatty environment with changes being made on the fly. In Wells Fargo's world, QA was always done at a different location, usually by seasoned inspectors who pounced on mistakes and took sometimes two weeks to review a program.

Says Banaugh: "We told eBay, 'There is going to be formal QA on this project, and it will be done off-site.'" At the same time, though, she told her inspectors to pick up the pace, so that they wouldn't slow down the rest of the project. "This isn't two-week quality assurance," she remembers saying. "Let's turn things around in four hours."

As Wells Fargo and eBay got to know each other, they were united by a belief that if they made all the right moves with Billpoint, they might have a sensationally appealing service. As fast as Internet usage was growing, there wasn't yet a widely embraced way to transfer cash online for person-to-person transactions. Plenty of companies had ambitions in this area, but Wells Fargo and eBay hoped that they could become the market leader -- before a competitor beat them to it.

On the eBay side, Janet Crane was especially attuned to the potential of the alliance. She had joined eBay in late 1999 after more than a decade in financial services, including a stint at Mondex, a smart-card company. She regarded other startups -- most notably the PayPal service -- as Billpoint's keenest competition. As CEO of Billpoint, Crane was in the best position to make the partnership work.

The Wells Fargo name alone "helps us gain credibility with customers," Crane explained to people on the eBay side of the team. People who might not trust eBay with their money would be willing to use a new financial service if Wells Fargo's reputation stood behind it. And Wells Fargo brings more than just a nameplate, Crane observed. The bank "has an incredible number of people who can be brought in to help with almost any technical question."

Billpoint wants to be seen as a safe, reliable way to combine the best features of credit cards and personal checks into an Internet transaction that can be completed in two minutes or less. People wanting to make a payment would share their card numbers with Billpoint, which would keep their data secret. Billpoint would then reroute the money into the right person's checking account, collecting a small fee for its services.