Every business has to start somewhere. What truly makes this country great is the freedom of enterprenuership that every one of its citizens have. Capitalism at its best signifies the power of a single person to reach monumental goals and turning a simple idea into a huge corporation. But in our pursuit of this glorified state, have we snubbed the little guy?
Corporate earnings are billions of dollars a year for executives and shareholders. Online companies such as eBay, PayPal, Google, and Blockbuster have crushed the little guy beneath the giant wheels of change. What would have been important to the small companies as they used to be is a far cry from the values that these corporations embrace today. Will it always be this way? Change is inevitable, but does it really take stepping all on the individuals that got them there in order to succeed? It’s as if once a certain dollar amount is reached in net revenue, the blinders go on, and the company loses touch with the little guy.
EBay, Inc. began in 1995 with one little guy’s idea on a better way to garage sale, as a way for his girlfriend (now his wife) to trade Pez dispensers online. By 2001, more than $9 billion in merchandise was sold via the auction monster. Now, eBay Inc. is the biggest internet marketplace, reporting a gross profit of $2,656,894 for 2004.
In an interview with eBay’s founder Pierre Omidyar in BusinessWeek Magazine, Senior Correspondent Robert D. Hoff asks a pertinent question:
Hof: “It seems ironic that eBay started out intending to level the playing field for small businesses and individuals, and now eBay is a big corporation. How do you make those jibe these days?”
Omidyar: “It sure is ironic. I like to think we’re a different kind of big company, because of the way we interact with our community. If we lose that, we’ve pretty much lost everything. If you’re starting a revolution and you succeed, then are you still a revolutionary? It’s a little bit weird, but I think we still have a long way to go, bringing the level playing field to the rest of the world.”
Interestingly, earlier in the interview, Omidyar touts his original ideals of listening to his customers, and shaping the software based on their suggestions, sometimes even the same night he received an email from a customer. But increasingly, as of late, eBay’s customers are reporting a greater dissatisfaction with the way the conglomerate is handling their marketplace. After all, it is eBay sellers that are the actual customers, because they pay all the fees, and therefore are the source of eBay’s revenue. And unless you are a Power Seller, forget about calling eBay. Their number is reserved for only the elite few who can meet their standards of maintaining so many thousands of dollars in sales per month. You’ll be lucky if they respond to your email within a week. So I wonder what makes a level playing field, as Omidyar so aptly puts it. Can eBay truly claim to not have reached it yet? Come on…
Since the company raised its prices to sellers earlier this year, though, there are defections to Overstock, Yahoo, Amazon, and other smaller auction sites. Is eBay in that much financial distress that it has to rob the sellers of their hard earned auction profits only to pay higher fees? By the looks of the profits listed earlier, we can all see they’re not struggling. According to BusinessWeek’s David Kiley:
“Ebay’s stock is trading at almost half its 52-week high despite continuing to make money. One wonders if eBay has simply become as complacent as General Motors became in the 1980s, figuring that Toyota and Honda would never amount to much, and that people would prefer a used Buick to a new Hyundai. eBay is still a market share leader by a big margin. But investors and Wall Street tend to value a stock based on what they think future performance will be. Looks pretty bleak.”
Tiffany & Co., which has filed a lawsuit against the Internet auction giant for facilitating counterfeits, claims that eBay has a responsibility to police its auctions. Gucci, Prada, and other big names are closely watching the suit, as the ramifications will affect them as well. Originally clinging to the values of Omidyar himself, policing auctions was indeed something that they did. Now, the complacency of eBay and it’s “hands off” attitude is almost disgusting. Big mistake; the stakes are high for eBay. Other firms are watching and legal experts predict a flood of similar copyright lawsuits if Tiffany prevails. Lawyers salivate at the thought of getting a piece of the eBay pie.
“Everybody wants to see where this is going,” said Lou Ederer, an intellectual property rights expert. “How much longer can eBay hide behind their bigness? They are taking the position that they can’t monitor thousands of auctions going on all at once. But where do you draw the line? Firearms, alcohol? There are certain industries where the line has to be drawn.”
Another giant, Google, is seemingly only a bit better. Google’s search engine does not generate revenue, as there are no paid inclusions to be listed in the search engine. Rather, Google relies upon its infamous PageRank to rate the importance of sites, and how they get listed. Factors such as keyword density and placement, aging, and link popularity all figure in to the secret algorithm, called PageRank. So where does Google make its money? Google’s pay-per-click advertising, AdWords, is the major source of Google’s income. Google’s concept started in 1996 with two little guys, Larry Page and Sergy Brin. While students at Stanford University, the pair collaborated on a search engine called BackRub, named for its unique ability to analyze the “back links” pointing to a given website. Housed with low end computers in a meager dorm room, the two college students originally sought a buyer for their technology, but no one was interested, so they decided to give it a go themselves. They got a few investors, and Google, Inc. was born. What had been a college research project was now a real company offering a service that was in great demand. The rest is history.
Now, with Google’s enormous impact on the internet, considering that 85% of all website traffic comes from search engines, people cannot fail to take notice. If your website doesn’t appear in Google, chances are you’re not getting good quality traffic. Google ranks #3, surpassed only by Yahoo and MSN, #1 and #2 respectively. Further, the corporation seeks to match its closest competitors by moving away from search engine technology and into the fields of web-based email, shopping, local searching, blogging, and even home pages, in order to steal that market share as well. When is it enough? That’s the funny thing about greed–it engenders more greed, and procreates like a bunch of rabbits.
But the search engine giant is in trouble in the courts, having lost one lawsuit already to Louis Vuitton, Inc. for trademark infringement in October, 2003, and another that the Versailles Court of Appeals, upholding the Vuitton decision, published in March, 2005. The court ordered Google to stop allowing the linking of advertisements to search terms trademarked by two travel companies by Google’s AdWords and to pay damages to the trademarked companies. According to CNN.com, “…The 20-page October 13 ruling by the court in the Paris suburb of Nanterre called into question the legality of the search system at the heart of Google’s business model.” The lawsuit will have ramifications on the validity of the pay per click advertisements, calling Google’s main source of revenue onto the carpet as more court cases ensue.
Google is in the process of removing French news agency Agence France Presse (AFP) from its Google News service, which aggregates links to online articles and accompanying photos from about 4500 news outlets. AFP sued Mountain View, California-based Google in the U.S. District Court for the District of Columbia in March, 2005. The news agency is seeking to recover damages of at least $17.5 million from Google. AFP also asks the court to forbid Google from including its content in Google News. And the greed continues.
In other news, Blockbuster’s CEO John Antioco was ousted at the May 11th, 2005, shareholder meeting, only to reinstated to CEO two weeks later by the board when the dissident financier and corporate raider Carl Icahn voted himself onto the board, with voting rights of 10% of Blockbuster’s Class A shares, and 8% of Class B shares, only to find out that outing the chairman would cost the corporation $51 million dollars. The two other board members voted in actually had extensive media experience. The only experience Icahn has is buying shares and then being loudmouthed at shareholder meetings. So keeping Antioco on the board, and thus voiding the compensation package, seems like more of an afterthought, or even a fast recovery from what could have been a very costly second quarter. The way corporate America is set up seems to be a good way to be accountable (i.e. to the FCC and stockholders), but is a good idea for the ones with the most money making all the decisions? What’s laughable in the Blockbuster drama is that Icahn wasn’t privy to the executive contract that Antioco had, and once Icahn was informed after his election to the board, he quickly changed his tune.
Blockbuster, Inc. was founded by Wayne Huizenga, who was named Ernst & Young World Entrepreneur of the Year for 2004 and 2005. He is the only man to have created six NYSE companies, and three Fortune 500 companies: Waste Management, Inc., Blockbuster, Inc., and AutoNation. He started as a door to door salesman for a trash hauling company. From meager beginnings into the world of multi-billionaires, Huizenga’s is truly a Cinderella story, although his character wasn’t always pretty. And now Blockbuster stock is half of what it was a year ago, and keeps dropping. It seems for every mountain peak, there is the downhill slide.
What I hope to accomplish by this article is not stir up anger towards corporate America; quite to the contrary! What I actually hope to do is give each and every little guy out there the hope and light the fires of passion that you can be a success story as well. But there is a clear warning that growing beyond the bounds of reason has its consequences as well. If your goal is to gain enough wealth to be comfortable, then by all means, go for it. But if your design is to be the best, or to be all things to all people, there is fair risk to you of replacement.
Are American corporations getting too big for their britches and forgetting their roots? You bet. So hey, America, stop forgetting the little guys that made you great in the first place! The little guys like you and me, enterpreneurs with one goal in mind: to make a living, can make a difference. After all, it only takes one to rock the boat.