The eBay Way

After becoming one of the richest 31-year-olds in history, eBay founder

Pierre Omidyar cleared out his cubicle, sold his modest home, and set off for

his native Paris with his wife, Pam. It was a change born partly of the Omidyars'

need to escape Silicon Valley's bubble frenzy of 1999, when they got mobbed at

cocktail parties and endlessly hit on by business-plan-pushing MBAs. But the

Paris chapter also stemmed from a deeper dilemma. From the moment Omidyar became

rich, it was apparent to his friends that he was overwhelmingly uncomfortable-embarrassed

even-by the money. "Don't make it grow," the accidental

billionaire once told an investment adviser, so fearful was he of the burden of

his multiplying commas.

In Paris, the Minitel-entranced French didn't care much about the Web or

the e-commerce mogul. So Omidyar had the time and space to sip black tea at

smoky cafés and ponder his next big question. What does a ridiculously rich man

with so little interest in money do? Solving the first part of the problem was

easy: the Omidyars had already vowed to give away virtually all their wealth.

The next part was harder: how to spend their billions and have an impact as

immense as eBay's.

Total Strangers 



Just as his vision of the perfect marketplace revolutionized commerce, so

too are Omidyar's ideas about philanthropy likely to disrupt the rules of

traditional giving. Omidyar is at the forefront of a new trend that is starting

to blur the old church-state divisions between the for-profit and non-profit

worlds, creating structural shifts that could lead to a new, hybrid

philanthropy. In March, he shocked the philanthropic community with news that

instead of investing purely in nonprofits, the Omidyar Network would house both

a foundation and an arm that would also invest in for-profit companies. All the

money made from the stakes in those companies-chosen by Omidyar and his team

of due-diligence specialists for their emphasis on open information, giving

power to the little guy, and fostering social capital-would flow back into the

investing arm to leverage into yet more charitable giving. "I don't see

why we ought to make an artificial distinction that says for-profit is all about

making money and only nonprofit is about helping people," says Omidyar in

an interview in the library of the network's offices, which sit amid the

thrift shops and antique stores in blue-collar Redwood City, Calif.

What influenced Omidyar most in this decision was the inspiration he took

from watching eBay users learn to trust 125 million total strangers. Disabled

people on public assistance turned into self-supporting entrepreneurs;

Guatemalan villagers started selling their handwoven wares to people on Park

Avenue. Says Omidyar: "You have to ask yourself, is it really true that

business can only be about making money? And is it really true that if you want

good things to happen in a community it has to be through a nonprofit?"

That's not the only radical move Omidyar is making. In many ways, Omidyar

is the anomaly among BusinessWeek's Top 50 givers. Philanthropists like Bill

Gates, Gordon Moore, and Michael Dell went beyond old-school giving, where you

give your money to a foundation, which then doles it out for you. Instead, the

new superphilanthropists applied the same brilliance that built their businesses

to their philanthropic causes.

Omidyar is pioneering a third way, a philanthropy that's fanatically

bottom-up. It's anti-vision. Anti-dictate. And, in a sense, Omidyar isn't

even choosing how his $10 bn is given away-or to what causes it goes. He wants

you to do that. How? For starters, there's omidyar.net, where Pierre and Pam

recently opened up a conversation with the world to discuss the direction of

their philanthropy.

Secondly, the foundation arm of the Omidyar Network, which still hands out

the vast bulk of the money, focuses on grants to individuals who are already

creating social change through their nonprofits. The critical tool of these

mostly smallish groups is the Internet, which enables people to take tiny ideas

and give them a global launch, in much the same way Omidyar created what fans

call the "first truly democratic marketplace" after selling, among

other things, his broken laser pointer online. (It went for 14 bucks.)

Rather than dictating bold prescriptions, then, the nonprofits Omidyar funds

flank problems, attacking them from the sides. Consider the story of the

toilets. Two years ago, Whittle's Global Giving designed a site that allowed

anyone, from anywhere in the world who was properly screened and vetted, to post

projects for funding. One such group was a slew of schoolteachers in Coimbatore,

India. Every year, they watched scores of girls leave school when they hit

puberty. And they had a sneaking suspicion as to why.

ONE SIMPLE FIX



The teachers posted a small, bedraggled project on Global Giving -- so tiny,

in fact, that it initially embarrassed Whittle, who had quit his job as a lead

economist at the World Bank to start the nonprofit. The project ad read:

"New Toilet Block for School. $5,000." Within a few weeks, four donors

from around the U.S., including a writer from New York City and a banker from

J.P. Morgan, put up the money. In less than three months, the school had its own

separate toilet block for girls; the donors had thank-you letters and photos

from the kids. Turns out the teachers had guessed right: The girls were dropping

out in droves because of the embarrassment they felt once they started

menstruating and had no private facilities. Now, two years later, 100 of them

have stayed in school because of this tiny addition. Within 10 years, Global

Giving estimates that 440 will have stayed through graduation. And the ripple

effect from this one simple fix is huge, given the fact that attaining an

education makes it much more likely some of these girls will eventually climb

out of poverty.

With conventional giving, whether it be to the Red Cross, United Way, or

small local charities -- once you write your check, you're often clueless as to

any particular outcome achieved. What's unique about Omidyar's projects is that,

like eBay, there's often a transparent system in place that allows donors to

monitor where their money goes and who receives it.

By Michelle Conlin With Rob Hof in Redwood City, CalifÂ

In BusinessWeek. Copyright 2004 by The McGraw-Hill Companies, Inc