The Perfect Store: Inside eBay

by Adam Cohen
Hardcover: Boston: Little Brown, 2002. ISBN 0-316-15048-7

"When the early history of the Web is contemplated centuries hence, Adam Cohen's detailed and thorough account of the founding and development of eBay will be among the books that people will turn to to truly understand one of the Internet's most important companies."
&mdash Kara Swisher, Wall Street Journal columnist, as quoted on the back cover

Adam Cohen is on The New York Times editorial board, and it shows. The Perfect Store is extremely thorough in its investigations, diverse in its viewpoints, and authoritative in its coverage. The "centuries hence" comment of the reviewer is very apt, as the book indeed reads as though it had come from the eminent newspaper of record. It's broken up into sections, with sections often following the inverted pyramid style of journalism: an eye-catching lead to pique the reader's interest, background, quotes from sources, analysis of signifiance. One could imagine each section coming from one article appearing in the Times, edited to smooth the transitions and remove the need for intercalary commentary.

But, of course, it isn't. The Perfect Store was published in 2002, after eBay had already become an established pillar of capitalism, and so has a chance to apply hindsight that isn't afforded to a breathless scoop operating on Internet time. For example, Cohen explores the feedback mechanism in detail, starting from the rampant abuse of the early days when it was not tied to transactions. He even looks at cultural aspects of eBay's global expansion; for example, the stereotypically stolid and by-the-books Germans often sent in complaints when not receiving feedback after a completed transaction (Americans would just accept it as something that got lost on the wayside in the bustle of commerce). Form emails had to be rewritten for the United Kingdom, as Britons read the excited exclamation-laden emails as painfully insincere.

Cohen approaches eBay from numerous angles. He delves into the company to examine its culture shift from the jeans-and-sneakers (and assembly-required office furniture!) to the arrival of the MBAs to the world of dot-com megadeals with AOL and Yahoo. He tracks the technical evolution of the site, from a collection of Perlscripts to a C++ enterprise-class application written at a nail-biting pace as the site failed for hours at a time. There's the usual story which appears in papers every Christmas of small-business owners who've made a success of selling on eBay. But he also digs into such things as eBay's founding myth, that Pierre Omidyar created eBay to help his fiancée trade PEZ dispensers. Even now in 2004, the story of the PEZ dispensers comes up every once in a while in an eBay story, but Cohen learns from Mary Lou Song, eBay's first full-time employee, that she in fact concocted the myth precisely because of its appeal and ability to get into print.

Controversial topics are dealt with in a balanced fashion. The VERO program, which allows copyright owners to patrol eBay for auctions infringing on their rights, is one such case. Cohen talks to both sides, to the mother of a died-young music star who aggressively ends auctions through VERO, but also to the outraged free-speech activists who made a sport of inserting red-flag keywords into unrelated listings. This foreshadows as early as 1999 the massed power of individuals to attack entrenched interests, later to be demonstrated by Google bombing and distributed denial-of-service attacks on web sites.

Two major themes which carry through the book are eBay's responsiveness to customer interests and Omidyar's quest for a perfect market. There's a lot of discussion of the give-and-take nature of eBay policies, of message board outrage, bannings of outspoken individuals later reinstated, forums whose sole purpose was to rail against eBay. Cohen's tracking of eBay policies also highlight its function as a market; as it grew, it developed a need to regulate such items as adult merchandise and firearms.

Sociologically eBay mirrored online the offline society which it displaced. (Of course, eBay deals largely in merchandise, a more concrete item of commerce than the articles and ideas that content sites provide.) And economically the function of eBay prices to govern supply and demand make it an irresistible target for economists accustomed to the paucity of data available for non-electronic transactions. Untypically for a book following corporate management, and in sharp contrast to the case-study nature of many management books, Cohen cites numerous scholarly papers. Among these are:

David Reiley's (formerly Lucking-Reiley) work on the monetary effects on sellers of eBay feedback [RePEc page for this paper]. In contrast, his analysis of USENET newsgroup auctions of cards for Magic: The Gathering [RePEc link for this paper], his dissertion which got published in the AER, took much more work.
Landes & Posner, "The Economics of the Baby Shortage," Journal of Legal Studies 7 (1978), 323-48, a paper arguing for the sale of parental rights, as an explanation for an auction of a baby to be born next month as an in-joke (the baby's parents and Richard Posner were both at the University of Chicago). Yet another example of a digging-deeper fact to be found in this book; the "first draft of history" wire services had just verified the authenticity of the famous kidney listing and were inclined to take them at face value.
Kembre McLeod, "'Happy Birthday, Screw You': The Collision of Copyright Law, the Folk Song Tradition, and the World’s Most Popular Birthday Song," presented at the International Communication Association’s 48th annual conference in Jerusalem, Israel, July 20-24, 1998. McLeod, a communications professor at the University of Iowa, owns a trademark on "freedom of expression" as a magazine title and sold his soul in a jar on eBay.

In summary, The Perfect Store is extremely engaging, with lively anecdotes illustrating the meteoric rise of eBay and the social implications which still haven't been completely thought-through. It's close enough to events to capture the excitement of the IPO and the frenzy of talented people leaving established companies for startups with particleboard furniture, yet distant enough to have events in perspective, to go beneath the surface that news sources present and even to bring in scholarly research. It studies the subject matter from many vantage points, and is so comprehensive that many an eBay newbie might discover unused features of the site by reading this book.

eBay is still growing, it may even collapse at a later date, and perhaps ten years hence there will be a much-expanded second edition. But The Perfect Store, albeit misnamed since it discusses eBay as much more of a market than a store, delivers a great blend of technology and business, culture and regulation. eBay leverages the Internet's status as the Great Leveler to mix giant corporations with mom-and-pop shops, enthusiastic collectors with people just looking to save a few bucks, and Adam Cohen comprehensively chronicles this dynamic, contradictory, and yet still cohesive blend of interests.