Saturday, June 28, 2008

Words of Wisdom from the eBay Seller Central Board

There are some very smart people who post on eBay's discussion boards and there are certainly some kooks as well, but I enjoy reading the posts to get a feel for what smaller sellers are saying.
This quote came from [a comment on a Seeking Alpha post and was re-posted by] serious_coder on a thread called: Great blog post from Randy Smythe on eBay Execs (are you wondering how I came across it?)

"A few thoughts about "radical change":

In my schooling as a Systems Analyst, I took a course called "General Systems Theory".

The basic principles are simple:
  1. A system will always tend to stabilize itself.
  2. If changed, a system will always attempt to adjust.
  3. If changed too often and/or too drastically, a system will thrash trying to adjust.
  4. The more complex the system, the more severe the thrashing.
  5. If the system cannot stabilize it will thrash until it destroys itself.

Summation: Radical change of complex systems is likely to cause severe enough thrashing for the system to self-destruct.

eBay is certainly a complex system and I believe they are on a path to self-destruction."

As I have said many times before, if eBay managers continue down the path they have started with all of these changes, a year from now there will be a completely new management team on-board or eBay will be have been acquired.

Changes were needed, even some that have been made, but the execution and the strategy have been faulty. Look at what has happened to Yahoo this year, to see the future of eBay if they keep going down this path.

Just my 12%


ms.pat said...


Nadine said...


The quote from the systems consultant was taken from the comments section of a Seeking Alpha article, New Selling Form Sinks Ebay Sellers, which attracted several excellent comments. I did not write it myself, though I wish I had.

Nadine (ebay id: serious_coder)

Randy Smythe said...


Thanks for letting me know. It was a good quote.


Anonymous said...

Cast around for some '180 degree' company deathmarch/bankruptcy stories, as told by employees in the firms who have pulled this crap.

You'll get 2 or 3 GOOD posts out of it. Spread 'em out, of course... :-)

Top notch writing lately. You can be certain the investors ARE taking it under advisement.


ms.pat said...

I wish the investors truly were taking it under advisement but I still see "buy" on ebay's stock. Many of us comment on every financial article that has a comments section - all to no avail. Now they've fooled themselves into thinking its a steal for the low price! Go figure....

nadine said...

Investors are usually behind the curve, especially when a new CEO is telling a good story about turnarounds and disruptive innovation. I figure Donahoe has a free hand from now until after the Christmas season no matter what a hash he makes of it. The numbers will be carefully scrutinized only after the story wears thin.

The lesson I take from past failures is that when the company is large, even disaster takes longer than you would anticipate.

Look at the history of Wang Labs. In 1985 founder An Wang got cancer, and put his idiot son Fred in 1986. Yet Wang kept making money and hiring - it didn't reach its peak employment level until 1989! In 1989, An Wang, as he was dying, had to fire his son and bring in competent management. But too late. In 1992, Wang filed for bankruptcy. Still, the company spent over three years under idiot management at a time when it would have needed genius management to survive. It still took seven years to go bankrupt.

Randy Smythe said...


I think JD and his team will stay in power as long as they continue to at least meet the quarterly estimates. The share price won't grow much but they will still have jobs.

If they have a bad 4th quarter and it is attributed to the marketplace business there will calls for a change from investors.

In the meantime sellers shouldn't wait to see what happens, they should start planning for a future that is not dependent on eBay.

David said...

I agree with eBay, if there is no buyers, the sellers will disapear.

But their is another side of the coin.

If sellers start leaving eBay in droves and going elsewhere, the selection of products will decline and buyers will go elsewhere.

Henrietta said...

eBay instituted a share repurchase strategy 2Q 06 that can only benefit from lower stock prices. It would be interesting to know what percentage of stock is eBay corporate owned.

Randy Smythe said...

Herietta, the share buyback is basically to help with the EPS (earnings per share)fewer shares outstanding improves the earnings per share.

They are a public company so all of that information is available. Employees are compensated in stock options so they all want the share price to rise.