The Idea: Omidyar was inspired by eBay’s social impact to create a hybrid model for his philanthropic Omidyar Network: a combination of nonprofit and for-profit.
My journey as a philanthropist began in September 1998, on the day eBay went public. I’d spent two weeks helping with the pre-IPO road show, and we’d arrived at the New York office of Goldman Sachs. I was exhausted. The actual moment was pretty anticlimactic. We’d always assumed that when you go public, your stock starts trading the moment the market opens, but it doesn’t work that way. You have to wait for the bankers to do their initial trades. So when the market opened, we just stood around on the trading floor with nothing to do. Nobody was really paying attention to us. There was an electronic ticker on the wall, and after about 45 minutes somebody gave us a heads-up that we should start looking for eBay. Sure enough, a few minutes later we saw our ticker symbol coming across from right
to left. We cheered; we hugged; we high-fived.
We had priced the initial public offering at $18 a share, which made my stake worth a few hundred million dollars. During the course of the day the stock rose to nearly $54. My shares, like those of all the other insiders, would be locked up for six months, so at this point it was just paper wealth. But on paper my stake was more than $1 billion. It was shocking and completely unexpected.
Soon afterward I began having conversations with my fiancÃ©e, Pam – now my wife – about what we were going to do with all that wealth. It was clearly far more than we would ever need, and it had accumulated very quickly: EBay went public three years after I wrote the original software, so there wasn’t a great sense of “Wow, we really deserve this – I’ve spent my whole life building up to it.” We felt we had a responsibility to make sure those resources got put to good use.
Within a few months we’d created a nonprofit family foundation, which is what new philanthropists typically do. We took an informal approach. A friend of the family served as the executive director. We gave money to this charity or that charity. It was a responsive thing – we would read about something in the newspaper and it’d be “Let’s give money.” After a couple of years we realized we needed to professionalize the foundation and become strategically driven. We recruited some executives to help us think about how to take lessons from eBay and apply them to philanthropy.
Many people don’t distinguish between charity and philanthropy, but to me there’s a significant difference. When I use the word “charity,” I think of what’s needed to alleviate immediate suffering. It’s just pure generosity driven by compassion, and it’s important but never-ending work – there will always be more suffering. Charity is inherently not self-sustaining, but there are problems in the world, such as natural disasters, that require charity.
Philanthropy is much more. It comes from the Latin for “love of humanity.” Philanthropy is a desire to improve the state of humanity and the world. It requires thinking about the root causes of issues so that we can prevent tomorrow’s suffering. And if we want to make sustainable change, we have to put all the tools at our disposal to their best possible use.
By the early 2000s I’d realized what a profound social impact eBay was having as part of its business.