The 1 Crucial Innovation Lesson
Every Business Owner Should Learn From eBay
The
company I first encountered as a Pez dispenser trading post serves as a
fascinating case study for what businesses need to do to retain
users.
EXPERT OPINION BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V
AND CHICAGO HIGH TECH INVESTORS @HOWARDTULLMAN1
Jul 15,
2025
Having collected Pez
dispensers since I was a kid and having an embarrassingly large collection at
the age of 50 (which my daughters and granddaughters had no interest in), I was
excited to learn in 1995 about what came to be called eBay—an online auction platform where you could buy,
sell, and swap Pez dispensers relatively securely with total
strangers from anywhere in the country. I became one of its earliest and most
enthusiastic participants, bought and sold plenty of Pez, and made some new
friends along the way. I also had dozens of classic lunchboxes, but that’s
another story.
The eBay founders thought they were building a
marketplace for their friends and family. What they also created was an amazing
discovery tool whereby passionate collectors could find similar souls who
were just as crazy about these little plastic devices (and zillions of other
collectibles) as they were. Entrepreneurs are constantly trying to develop new
businesses and to create, exploit, and sustain demand and desires for their
products and services. The beauty of dealing with collectors of any kind is
that there’s already a built-in passion for the objects which the exchange
experience merely needs to facilitate, channel, and monetize. It’s always
easier to ride the horse in the direction it’s already headed.
Most people know some
version of the eBay origin story—founded by Pierre Omidyar as a side project to
help his girlfriend trade Pez dispensers online—and everyone knows that it grew
rapidly from an auction site into a global e-commerce marketplace because it
tapped into an underserved analog population and pulled those folks into the
digital age. The speed and scale of the immediate nationwide adoption was
amazing.
What far fewer people
appreciate is that eBay is yesterday’s news—cluttered, dated, and slow. It’s
afflicted with the same disease as one of Yogi Berra’s favorite restaurants:
It’s “so crowded that nobody goes there.” In an age where time is everything and
patience is scarce, eBay looks, operates, and feels like molasses. It turns out
that trying to be all things to everybody, fulfilling at best by FedEx, and
making its connections to its users a mile wide and an inch deep might have
been a great formula for volume and growth metrics, but over time, it made the
site cumbersome and unfocused.
These days, everyone
wants just what they’re looking for, right when they want it, and instantly
deliverable. EBay opted to go wide instead of deep and never really owned its
customers in a world where alternatives were only a click away. Without constant
change, innovation, and site improvements, eBay was never going to build
lasting connections, a committed community, or loyal long-term
users.
EBay opened the digital
marketplace but didn’t keep pace with the nature and needs of the new breed of
collectors—especially passionate sports fans who were searching for community
and interactivity as avidly as they were for commerce, and just as interested
in buying something scarce and brand new as they were in owning decades-old
hats, helmets, jerseys, shoes, and uniforms. It turns out that nostalgia is
totally pliable—collectors can long for products created in their youth just as
fervently as for goods unpacked and shipped yesterday.
These newbies weren’t
the hermits, housewives, cat ladies, and hoarders of old. They were millions of
solitary kids, DIY techies, and fanatical sports fans (often all three rolled
into one) who were looking to be a part of something that played to their passions,
connected them to their peers, and encouraged them to engage and participate.
Not surprisingly, the opportunity to create new venues and marketplaces to
serve today’s hordes of hyped-up young collectors and dramatically speed up and
streamline the buy-sell process was far too good a prospect to be overlooked
for long.
First eBay, then
e-sports
An early instance of the
demand for new experiences was the explosion of e-sports as a spectator event.
Although I never understood why watching others play a video game could be a
contagious and addictive experience, it’s clear that the next several generations
don’t agree. Starting in 2017, we saw whole stadiums like the Bird’s Nest in
China or the Barclay’s Center in Brooklyn converted into viewing venues where
players sat on a stage in front of computers while the gameplay was projected
on huge video screens throughout the entire space. Fans bought tickets,
merchandise, and gaming equipment, while millions of additional fans watched
the competitions at home online through Twitch or YouTube. These players and
viewers were ripe for the digitization and gamification of collecting and
online retail.
EBay created static
stores, but not stirring streams; illustrative images, but not live videos; and
collector interest, but not real-time excitement and interactivity. Text-based
auctions simply made no sense for the Twitch generation. The need for speed,
sound, and action was clear, so into the void stepped Fanatics Live, a
dedicated, live-streamed collectibles and trading card platform which moved
online retail to the next level and made it a gamified, community-based,
compelling experience. In some ways, Fanatics Live is just the newest
instance of the web’s ability to smash together context, connection, community,
and commerce.
Cameo was an
early case of connecting fans and followers (especially in sports) with their
favorite athletes, performers, and celebrities and monetizing the experience. Bemyfriends was
a platform provider offering bands and other acts the ability to build, own,
and control their own platforms, finances, and destiny by
owning the IP and also directly connecting with their fans.
And now, Fanatics Live
will enable the most entrepreneurial fans and fanatics alike to build their own
online mini businesses. The formula is simple—virtually no barriers to entry,
modest production costs, all underlying technology provided by third-party
platforms, immediate action and gratification, and a chance to make a decent
living on their own as well.
Fanatics Live reports
that there are already mini-merchants like Stephanie from MamaBreaks and
Joel from Soccercrds who are allegedly making six-figure
incomes while working from home. This is one impressive side of their
multi-channel marketplace. And to be very clear, the success of the overall
Fanatics Live venture will have a lot to do with the performance, professionalism,
integrity, and customer service provided by these micro-merchants.
But the most critical
metric—and the real path to the long-term success of this venture—is the
degree, depth, and scale of the engagement of the participants. Connecting
passionate peers to other peers thru real-time video events like card reveals
and pack openings; enabling direct chats between and among buyers, sellers and
traders; and facilitating swift and easy transactions create exceptional levels
of cost-effective engagement.
On a global basis,
Fanatics Live users spend more than an hour a day on the site, which is 25-30
percent longer than Instagram’s comparable numbers. More than 70 percent of the
Fanatics Live users take advantage of the chat feature, and this consistently
leads to sales. On a monthly basis, loyal and committed users make an average
of more than 15 transactions a month.
Letting the fans drive
the majority of the action and the transactions, relying on substantial amounts
of user generated content, turning motivated users into platform advocates, and
building positive word-of-mouth are all critical to inexpensive global expansion
and to consistent user retention. But all of this activity and goodwill is
predicated on a foundation of authenticity and trust which, like it or not, the
team at Fanatics Live will need to assure, adjudicate, and otherwise backstop,
just like Amazon regulates and manages its third-party vendors. It’s not an
easy undertaking, and I’m not sure that the guys running the Fanatics Live shop
understand that becoming referees is an inevitable part of the deal.
They’re focused at the
moment on generating buzz, growth, excitement, and millions of happy fans. But
in the long run, to stay in business, it’s far more important to be trusted than to be
loved—and much harder.
