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Charlie Rose Talks to EBay's John Donahoe

The EBay CEO discusses the evolution of PayPal, his company’s shift toward mobile, and the decline of its signature auctions
“In technology, either you cannibalize yourself or someone else is going to do it”
“In technology, either you cannibalize yourself or someone else is going to do it”Photograph by David Paul Morris/Bloomberg

When you started as CEO of EBay in 2008, what did you find?
The fascinating thing about business on the Internet is that a company can become a global brand and get global reach in a stunningly quick period of time. And that’s what EBay did in its first 5 to 10 years. It became a global phenom in a short period. But just as you can disrupt, you can be disrupted. And EBay, when I got there, was beginning to be disrupted itself. So what we needed to do was to face up to the reality and in essence reinvent EBay with today’s tech.
Did you face resistance? Did people say you’re going to cannibalize what you have?
Absolutely. But at some point, you have no choice. In technology, either you cannibalize yourself or someone else is going to do it. So we took the tough medicine, labeled it a turnaround. No one liked it at first, but it allowed us to focus on fixing the fundamentals of the business, which have now turned beautifully over the last three to five years.
What were your priorities?
Pierre Omidyar, EBay’s founder, measures success by positively impacting hundreds of millions of people’s lives around the world and connecting them through trade. So one of the key bets we made very early on was on mobile. We saw that mobile technology was going to be a profound force in people’s lives so we bet early on mobile, and we bet hard.
What did the naysayers have to say about that?
“They’ll never shop on a mobile device. It wasn’t safe. They’d stay with a larger form factor, like a computer.” We understood mobile just to be another screen.
Has the speed of change in mobile surprised you?
I never imagined the sea change in consumer behavior over the last three to four years. People are buying 8,000 cars a week on EBay’s mobile app. We’ll do $20 billion of mobile commerce and $20 billion of mobile payments volume this year. It’s having a transformative effect on the two industries we compete in: retail and payments.
PayPal was disruptive. Do you worry that it will be disrupted by Square or another payments rival?
I worry about disruption every day, are you kidding me? That’s what spurs you to do innovation. The big change we’re seeing with PayPal is, again, driven by mobile devices. They’ve blurred, if not obliterated, the lines between online and offline, between what used to be called e-commerce and what’s now called retail. Consumers feel they have a mall in their hands now. Last year, in offline retail—in over half of all transactions, or $10 trillion—the consumer accessed the Web during the shopping experience.
Some say you want to be Amazon.
No, no. We have a very different approach. Amazon’s a retailer. I don’t think we’ll ever be handling the goods. We’ll never be a retailer. [We’re a] commerce and payments platform that partners with retailers, large and small, to help them compete against Amazon and in this changing environment. We’ll never compete with them, and that’s a very important point to these retailers.
What about Wal-Mart and Target?
We’re increasingly partnering with retailers to help them, because retailers are recognizing that they’ve got to reach consumers online, on mobile devices in the store. PayPal’s going to be a mobile technology where the notion of your physical wallet is going to seem arcane three or four years from now. You’re going to upload all those [credit] cards into your PayPal wallet, and you’ll be able to pay whether you’re in the store or on a mobile app or at home on the couch. And that helps retailers.
How much of the auction business remains in your DNA?
Auctions are just a format now in the core EBay business. Auctions are good for things that have an uncertain value. So, a used item or a really scarce item. But for most things, people would prefer to have a fixed price because they want the satisfaction of buying it immediately.
People talk about Amazon, Google, Facebook, and Apple, and how they’re edging into each other’s businesses. Is that the future?
The first thing I’d say is: And there’s EBay. We’ve been more quiet, but we’re a commerce platform that touches $175 billion of commerce, almost 20 percent of all e-commerce. We want to be the best in the world at commerce. Those other companies do overlap at the edges, but to date no one’s been successful in fundamentally getting into someone else’s business.