At E-Tech earlier in the week Ross Mayfield blogged a conversation between Esther Dyson, editor at large for CNET, and Release 1.0 and Pierre Omidyar, the founder of Ebay.
O: Generally less choice can lead towards more satsification. I feel the need to reframe it. If less choice is good, then is users in charge good? It is so important because we are talking about individual self empowerment. When they are empowered, this leads to making the world a better place. What is important is what environment they are in when they are excersizing their choice and their power. With eBay, I focused on the environment where when people act in their interest it leads to a greater good.
Esther: a certain number in the middle that if you treat them well and give them power, they will become better and better. But some will do bad.
O:Focus on environment. I founded eBay on the notion that people are basically good, and 10 years later we have evidence this is the case. The kinds of structures I think are important:
1. Access: open access, level playing field, transparency, equal access to information are attributes of any environment with positive outcomes
2. Connection: enabling individuals to connect and interact with one another. Market solutions, collaboration and wisdom of crowds.
3. Sense of ownership: skin in the game lets individuals feel there is an investment required to participate and accountability (e.g. reputation systems).
One of the ways that you can limit choice is by creating a structure, a set of rules that says this is what this environment is about. So you do not have a choice to behave contrary to the rules. Doing this can make people uncomfortable despite wanting to be inclusive. Be most things to most people. If you are a bad actor we don’t want you in the community. I map rules to limiting choice in this context.
Esther: start with one set of rules, what are the rules for changing rules?
O: And interesting set of questions. If you start with the notion that people are good and enabling them to persue their self interest makes the world a better place, then you have to have the default assumption that allowing them to make their own choices is the right thing to do. That means for eBay, Meetup or other systems — you start with as little structure as possible, watch what they are doing and limit the behavior that is contradicting the environment you are trying to create. Lots of consequences for over regulation. Important to pay attention to what people do when they don’t make a choice.
At eBay we have made a lot of decisions where we had to respond to the community. In the early days we thought of the economic system and taxing behavior that we thought that was okay, but not great. E.g. imposing a tax on reverse price action because the price discovery mechanism was less transparent. That was a good way to do it, can’t think of a negative example offhand. You don’t want to legislate or criminalize all negative behavior.
Esther: many people have free services here and are trying to find how to charge for them appropriately.
O: My approach to this kind of problem is that if you are providing a service of value to users, you as the provider, designing for the user, create a sustainable business model. The best way to do that is derive revenue from the core value you are creating. With eBay, the transactions, rather than something that is happening on the side. We need to be looking for businesses that are a force for social good. But a lot of people do not believe this and think you have to make up for profits through contribution to charity. If you can charge a fair price and can use that to build more services at charge that pays employees and puts their kids through school — all this is a good thing.
Zoe Baird: can you talk a little bit about what you see as the next wave of tools to have both transparency and privacy?
O: Transparency in a system doesn’t mean transparency around individuals actions. Not every user action needs to be transparent. Having control over identity is critical. If you are in an economic system, buyers and sellers need to know each other or intermediaries need to be known, but full transparency is not directly complementary with commerce. Need to protect individual information with their own control, but some level of transparency is important.
Esther: allowing a second pseudonym that authenticates your identity (e.g. Opinity)
O: These are great solutions for privacy without loosing the ability to conduct commerce.
Gary Bolles: with eBay you have an infrastructure, but with the Network what are the kind of rules?
O: One of our important realizations is that business cannot be left out of the equation and can be a force for good. I recently rediscovered Adam Smith, the classic baker selling to shoe maker example where the profit is evidence of the quality of life increasing for both parties. Smith held that we needed competition and no negative externalities, but our modern economies are more complex. Which is where we get to Access, Connection and Ownership.
The wonderful thing about an enabling environment is that it leads to trust. Buy something from a stranger and it can teach you that you can trust a stranger.
Christina Koukkos: what example investments can you share? Someone else asks about clean tech?
O: Example of our investments would not include clean energy. Clearly clean energy is an example of a business that can be a force for good, something that can be sustainable as a business and a sustainable contribution. Compare to the current industry which has a ton of externalities, an industry you cannot be convinced that you are making the world a better place if you work for in it.
A lot of ON investments in this room. Linden Lab demonstrates connection and collaboration, shared interests within world sometime, shared ownership. Meetup: how does my group work? Eventful: has an event demand aggregation tool that increases the level of ownership and user empowerment.
Someone asks: how do I extend my reputation I built within eBay into other environments?
O: Because you can have different environments with different rules and different structures, the reputations you build don’t necessarily map to other environments. There is a desire to say a local reputation should be extended nationally (Mayor of a small town to President of the US), but while it is relevant it may not necessarily map.
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This guy really is a genius. Ebay is a company that listened to its users and suceeded.