Part 7: In June of 96, Microsoft bought eShop and according to the book Pierre Omidyar, Pierre made $1 million from the sale.
Pierre knew someone at Benchmark Capital, because they had invested in eShop. In 1997 Pierre got a chance to demo to Benchmark partner Bob Kagle, whom I knew well because he had wanted to invest in Fatbrain. The demo gods defeated Pierre that day because AuctionWeb was offline, so Bob was unimpressed. Fortunately, Bob got online later and found hand-carved decoys like the ones he collected and that got his attention.
In my opinion, what really sold Bob was the way Pierre thought of AuctionWeb as community. Just 6 months after AuctionWeb launched, Pierre built The AuctionWeb Bulletin Board and it thrived. He had become good at community during the hours he spent on Usenet.
Benchmark invested $6.5 million, $1.5 million as loans with stock as collateral. Bob told The Washington Post in 1999 that without his investment eBay may have sold to a newspaper chain for $50 million. This gave them them the money to stay independent.
Bob told me that he had two stipulations for Pierre: (1) He wanted a design firm like Frog to develop a new look, and (2) he wanted to hire a seasoned CEO from a major consumer brand. Those were the days when there was a widespread belief that founders did not make good CEOs.