A tradition at eBay is that the people who work with its senior executives get to name their personal conference rooms. The meeting place belonging to John Donahoe, the top executive for eBay’s core online marketplace, is Dennis the Menace. If the Wall Street Journal’s sources are right and Donahoe is named the next CEO of eBay when Meg Whitman retires, he’ll likely start causing mischief almost as soon as he’s in the top job.
Donahoe isn’t nearly as well known as Whitman, the public face of eBay (EBAY) for a decade. But he’s no newbie. He’s been at the company for nearly three years now — a tough three years given that he presides over eBay’s thorniest problem, its slow-growth online sales engine. eBay’s missed opportunity is gargantuan. Compared with Amazon.com’s (AMZN) business, for example, eBay.com enjoys a well earned monopoly and the rich profit margins that come from holding no inventory. Yet, as I’ve commented recently, competitors like Amazon and Google (GOOG) have out innovated eBay, decimating its stock. (Meg Whitman claims to not follow eBay’s stock price. Read my account of the company mid-malaise, about a year ago.)
There already are signs Donahoe has taken the reins at eBay. In early December he spoke at a UBS conference and hinted strongly that major changes were afoot in eBay’s fixed-price sales business. eBay’s sellers have felt nicked and dimed by the company for years. Donahoe suggested that eBay will tinker with its pricing model by lowering upfront prices and raising closing commision fees. The lowering part spooked Wall Street, even if it’s the right thing to do. (It’s a lot like economic stimulus: Lower taxes in hope of expanding the economy. eBay’s not the U.S. government though … if it lowers upfront fees and doesn’t convert the sale its revenues go down.) An insidery writeup of Donahoe’s talk appeared here.
The other big decision facing Donahoe is what to do with PayPal, the eBay-owned payment business that is roaring. Late last year PayPal quietly juiced up its management team, making four key hires of prominent executives who worked at blue-chip companies including Avon (AVP), American Express (AXP), McKinsey, Oracle (ORCL) and Visa. PayPal’s growth engine is its business selling services to online merchants other than eBay, making eBay’s ownership of PayPal less necessary. It’s hard to imagine that PayPal was able to attract such top talent by offering stock packages merely in eBay stock options. Asked if the news was evidence that eBay was planning to spin off or sell PayPal, a PayPal spokeswoman responded: “This shows the caliber of people that want to leave fantastic jobs at fantastic companies to come to PayPal. There are no plans to change PayPal’s structure within eBay.”
The question remains what John Donahoe will do at eBay, assuming he gets the job. (I used to think Jeff Jordan had a lock on the job; I was wrong.) Donahoe is quite literally the Mitt Romney of the Internet world. He’s a Bain consultant through and through, a handsome guy with a gigantic Rolodex (note to kids: that’s where people Donahoe’s age, 47, used to keep their contacts; it’s now a metaphor) and a bias toward action.
Be certain of one thing, should the man insiders call Dennis the Menace get the job, expect some mayhem in the near term.