Business Fights Back: eBay Learns to Trust Again

Just outside Berlin are the remnants of an East German checkpoint: Drewitz-Dreilinden. For nearly 40 years, it was a stark barrier between East and West, separating two cultures on the constant brink of war. One culture was built on state control and fear. The other was based on freedom, private markets, and trust.

Today, the checkpoint has been transformed into an office park, housing the German subsidiary of eBay. Soldiers have disappeared in favor of landscaped grounds and a new address: Marketplace 1. Not everyone would choose an office with such an ominous past. Yet for eBay, arguably the most successful Internet company in the world, this location is compellingly apt.

Look at eBay's constant profusion of online auctions, and you will see more than just an ultramodern form of commerce that is fueled by the Internet -- a virtual World Trade Center. You will also see an intense tug-of-war between two utterly different views of human conduct. It all comes down to a few basic questions: Can we still trust people we don't know? Will our lives be better if we open our mailboxes -- even our hearts -- to people far away? Or is trust a dangerously naive way to live and do business, yet another casualty of September 11?

Whether by accident or by design, eBay has become a remarkable testing ground for this debate. Some 34 million people now participate in eBay, which consists of buyers and sellers from all over the world. Hardly any of them know one another. Nonetheless, they ring up commerce at a staggering rate of nearly $10 billion a year, taking it on faith that someone really will send the money or ship the goods on time.

In the overwhelming majority of cases, that trust is richly repaid. Trading partners who find each other online go on to enjoy a smooth exchange, some kind words, and maybe even a new friendship. The exceptions to eBay's culture of trust are rare but horribly disquieting. Over the years, people have accessed eBay not just to deal in Monet prints and teddy bears, but also to offer Nazi pamphlets, gruesome pornography, and mementos of convicted killers. The same technology that empowers millions of people's healthy passions also provides opportunities for much darker impulses. And the Internet makes it possible for any operator -- good or bad -- to affect more people's lives faster than ever before.

Even in calm times, the trade-offs are perplexing. Trust too much, and you are easy prey. Trust nobody, and you live a morose, empty life. Until September 11, most people thought that they could strike the right balance. But when a handful of airplane passengers turned out to be murderous hijackers, everyone's inner gyroscope was sent reeling. Suddenly, it was clear: We had entered a world in which some very powerful people abhor the rise of American-style capitalism -- and oppose modernity itself. Whom can we trust now?

The Kindness of Strangers

In this altered world, some of the gutsiest and most unexpected reassessments are taking place at eBay. Now that terrorism looms larger than ever, it would be easy to let suspicion take command of our lives. But at eBay's offices and in its vast user community, people have made exactly the opposite decision. After an agonizing first few days in September, they redoubled their bet on trust

"At first, everyone at eBay was just plain stunned," says Meg Whitman, the company's president and CEO. "These attacks strike at the core of a lot of things that people believe in."

On September 11, eBay's new listings plunged 25%. As news of the terrorist strikes spread, nobody wanted to put up merchandise for sale, let alone bid on it. The eBay message boards became grieving boards. "There was such a sense of powerlessness," eBay's chief financial officer, Rajiv Dutta, recalls. Yes, eBay employees began putting flag decals by their desks and Statue of Liberty screen savers on their computers. But such gestures couldn't change anything.

Overnight, eBay's sweet-natured philosophy -- articulated by the company's founder, French-Iranian immigrant Pierre Omidyar -- started to seem like a painfully innocent relic of a different era. "We believe that people are basically good," eBay had declared in 1998, when it first posted its code of values on an obscure corner of its Web site. "We believe that everyone has something to contribute."

But were those thoughts really so naive? "We do $2.25 billion worth of gross sales a quarter entirely on trust," Dutta says. "The number of positive experiences that users have is staggering. This company could not work if people were so distrustful of each other."

And so, by the weekend after the September 11 attack, eBay executives decided to turn part of their Web site into one of the world's biggest fund-raising drives on behalf of the victims. EBay users would be invited to auction off anything imaginable for the benefit of charities such as the September 11th Fund. All intermediaries, including eBay and Visa, would waive their fees. The program would be known as "Auction for America." Its goal, eBay COO Brian Swette declared, would be to raise $100 million in 100 days. The millions of members of the eBay community would get a chance to demonstrate the power of good over evil.