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Tue Sept 30 2014 09:00:49

How Will John Donahoe's Tenure at eBay Be Remembered?

By: David Steiner

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In baseball, there's a saying after a team has a bad season: You can't fire the team, you fire the manager. 

John Donahoe's team at eBay has had a bad season, with growth that didn't keep pace with its competitors, a public confrontation with investor Carl Icahn, security breaches, site outages,.. you could say that eBay has had a very bad season.

Today, eBay announced that it will be splitting eBay and PayPal into two separate companies. Devin Wenig will head eBay, while American Express executive Dan Schulman was named as president and CEO-designee of PayPal. John Donahoe and CFO Bob Swan will have no executive position in the new companies.

No matter how John Donahoe's departure will be spun in San Jose, this was not a decision by Donahoe to "spend more time with family." It's not difficult to understand why eBay is going in another direction with its leadership. The question is why the board stuck with him so long in the first place.

Donahoe's lack of vision for the marketplace was severely out of place in an innovation-driven industry. His disregard for eBay's most valuable asset - its small sellers - was evident in his inability to communicate changes in policy to users in a timely fashion. Unannounced changes to the site sent merchants scurrying to catch up, causing them to change workflow (or stop altogether) and revise listings.  

While many sellers, prior to Donahoe's tenure, were able to resolve issues by reaching out to category managers within eBay, reports were rampant of staying on hold with outsourced customer service, often leading to no resolution of the issues.

Donahoe's legacy will be a dysfunctional search engine, a major security breach that compromised customers' sensitive information, and preferential treatment of large-box retailers, both domestic and Chinese, that took the eBay experience from one of being about Discovery, and made it mundane.

The bottom line is that Donahoe was the wrong man for the job.

Former CEO Meg Whitman professed that "a monkey could drive this train" when asked about leading eBay.  Despite her own shortcomings, Whitman seemed to have an understanding that eBay was a self-sustaining (and for the most part, a self-governing) entity. Even though eBay is comprised of hundreds of thousands of disparate merchants, they all have once thing in common: Profitability. The vast majority of sellers know that to sustain their businesses, they have to maintain good service and give customers a good experience. Nothing is as strong a motivator as acting in one's own best interest.

This is not to say that eBay did not have problems prior to Donahoe's tenure. Fraud was a constant problem, fee circumvention by sellers was an issue, technical problems were frequent due to the site's ancient platform. But six years later, are any of those issues any better?

Donahoe will reach back to his Bain roots and oversee the split of eBay and PayPal, then will likely remain on the board of one or both companies. And while it remains to be seen how eBay's merchants will fare under Devin Wenig, one thing is inarguable. The Donahoe Era was a disaster for small sellers.

David Steiner is cofounder and President of EcommerceBytes.com

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Perminate Link for How Will John Donahoe's Tenure at eBay Be Remembered?   How Will John Donahoe's Tenure at eBay Be Remembered?

by: Noneya This user has validated their user name.

Tue Sep 30 11:01:29 2014

It was Donahoe's horrible mismanagement that permanently lost me as a seller. in the years since, I've had 400K in online sales, money that would have been flowing through Ebay otherwise. I'm a very small seller and I have less than 100K in sales a year, but it adds up. How many of us left and took our revenue with us Thanks to Donahoe's high handed disregard of our cumulative value to Ebay?  

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by: Deltamaster This user has validated their user name.

Tue Sep 30 11:03:30 2014

He will be remembered as the man who turned Gold in to Lead.... or the guy who killed the goose that laid golden eggs.

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by: Deltamaster This user has validated their user name.

Tue Sep 30 11:06:08 2014

Former CEO Meg Whitman professed that "a monkey could drive this train" when asked about leading eBay.

Well, Meg ole' girl, that may be true but it took an idiot human to crash it!

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by: sasikat9 This user has validated their user name.

Tue Sep 30 11:08:02 2014

It will be remembered as a horrible nightmare that took 10 years to wake up from.

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This user has validated their user name. by: laurengrace

Tue Sep 30 11:10:59 2014

Good riddance to him, And Thank You David for being our voice. Great article.

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by: AuctionMonkey This user has validated their user name.

Tue Sep 30 11:15:33 2014

Great news!! I just pray that this sparks an increase in changes for the BETTER instead of us being treated like crooks. :)

Imagine, 99.7% on a site like Urban Spoon, you would be the talk of the TOWN!! They don't shut down your restaurant because a few people were grouchy about something out of your control :)  

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by: WhatWas This user has validated their user name.

Tue Sep 30 11:20:30 2014

His tenure? I would say a close analogy would be the summation of two failed Presidencies, Nixon and Carter.

I am not a crook, just simply an ineffective leader out of my element.  

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by: a_c_green This user has validated their user name.

Tue Sep 30 11:23:47 2014

The only thing I can add here is my congratulations for such an excellent summary, and I hope to see it quoted widely elsewhere as well.

I see someone else has already thought of ''Ding, Dong, the witch is dead!'' My contribution will be, ''Don't let the door hit you on the way out!''

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by: cunife This user has validated their user name.

Tue Sep 30 11:26:23 2014

Maybe he'll apply for that newly open position as head of security for the White House.

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by: Tiffee Jasso This user has validated their user name.

Tue Sep 30 11:27:21 2014

Well said. In the meantime I am hoping someone takes up the slack on both Ebay and Paypal and I guess I am going to have to look into getting my shipping labels somewhere else. Ebay will no longer be associated with Paypal and Paypal does not have the padded priority flat rate envelope and other services available on their site. Personally until this new 180 day return policy, I have always liked Paypal, but if you take a look at the user's agreement, you see that one of the big credit card companies are really running Paypal's policies right now. As for Ebay, it should be apparent to all that if you run it into the ground, it will sell a lot cheaper for someone that is thinking to take it over.  

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by: pace306 This user has validated their user name.

Tue Sep 30 11:28:44 2014

The big wigs talking about the split are missing more then a few important items - Im surprised at their lack of clarity.

1) the majority of Paypals business comes from sellers on eBay being FORCED to use them as the payment processor. It was done to boost Paypals numbers PERIOD.

2) It was done to make Paypal into eBays leg breakers. Do something "wrong", ignore any one of eBays rediculous mandates and Payapl came by and debited your account whether you liked it/agreed to it or not. With out that kind of control, without that constant feed of customers what "power" does Paypal have? Wheres the value? Customer confidence towards Paypal isnt all that good and neither is eBays. People like those 2 less then they do Monsanto.

These 2 being separated isnt 1 company spinning off another, its like splitting Siamese twins.

Careful doctor(s) you may kill both babies when you try this surgery.

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by: Grandma_Fish This user has validated their user name.

Tue Sep 30 11:29:21 2014

Well written article, David. No one could have said it better. It'll be interesting to see how this all plays out in the coming months.

@pennie6500 LOL! That Munchkin song was the first thing that came to my mind, too!

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by: FREDDY This user has validated their user name.

Tue Sep 30 11:32:06 2014

FAILURE.

Took a good fun company and ruined it.

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by: Russ This user has validated their user name.

Tue Sep 30 11:34:40 2014

The Wall Street media will make JD look like a prince.  All praise so that he can then run for Governor like the last CEO of eBay.  And other former CEO's that are currently Governors, e.g., Rick Scott of Florida, the former CEO of Hospital Corporation of America (HCA)...CEO's all do bang-up jobs after the abuse of their former companies.

As for how eBay members will think of JD, sellers will still be shaking from fear the ''other shoe'' will drop any moment and buyers, well, they can still get it for free and they'll love that.

I cannot imagine eBay ever returning to what it once was...a bit of a sense of community, buyers and sellers trading amicably and successfully with little intervention from the ''venue.''  Oh, my...optimism....naah!

I can just imagine what an eBay Live! Community Conference would be like in today's eBay world....

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by: gutspiller This user has validated their user name.

Tue Sep 30 11:35:00 2014

What has Ebay done for the small seller? Business down with 70%. And although a complete lack of sales, more problems than ever before. So left Ebay months ago.

That business that was no longer wanted on Ebay started their own website. The last 3 months we've seen a 200% growth compared with the same quarter last year.

I've lost my faith in Ebay a long time ago. JD being set aside won't change my mind to go back. And I'm afraid a lot of ex-Ebay sellers will think the same.

I think after the split we'll see how the books have been coocked or Ebay is effectively bought out by google or so to cover this.

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by: OnlyPollyPocket This user has validated their user name.
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Tue Sep 30 11:46:00 2014

Stunning article!  Thank you!

Agree with previous poster, let's get this article into the mainstream...passing it on to all who will listen ;)

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by: adrian44 This user has validated their user name.

Tue Sep 30 11:47:31 2014

Meg said "A monkey could drive this train" and that is who she supported as doing the driving!  

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by: Mark4 This user has validated their user name.

Tue Sep 30 11:53:24 2014

Donahue destroyed ebay. His replacement really has his hands full to undo all the mess that Donahue created. it may be too late with Alibaba moving in, I bet they buy ebay and turn it around.  

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This user has validated their user name. by: Frankcoins

Tue Sep 30 11:53:29 2014

This is good news, because most of the draconian eBay policies are to ensure that they don't lose money through Paypal...such as rather than face a chargeback which they might have to eat, they simply have policies that favor the buyer (even crooked ones) and simply  deduct the money from the seller's account.

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by: jsgeare This user has validated their user name.
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Tue Sep 30 11:57:15 2014

I can't remember when I have ever heard more refreshing news than this! And how will John be remembered? About the same way, I should think, as a self-important president of a homeowner's association who one day mercifully moves away. The residents can recall the horrendous decisions that were made, the thick book of contradictory rules, and an attitude of the most cultured indifference. And that's before we even talk about flat-out stupidity. People will come to realize that such improvements as may have been made during his tenure occurred more in spite of him then because of him. Hopefully, the new leadership will recall the corporate culture which preceded his reign of terror, and be inclined to restore it. Hopefully, sellers will be able to stop worrying about the peas touching the mashed potatoes or the precise manner in which they make their beds -corners just ''so.'' No doubt John will continue to be present in some consulting or perhaps honorary capacity, something, perhaps, to placate stockholders. If so, then let us hope he is retained in the same way as Jeremey Bentham.

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