eBay's Squandered Trust

January 18, 2010   

Last week, I met with one startup trying to solve "online trust" issues in the social sphere, and wrote about another one dealing with trust in commerce (both online and offline). I guess for some, trust and reputation seem like an unsolved problem. But shouldn't this have been solved already?

I think it should have... by eBay, a long time ago.

Almost all of us have bought or sold something on eBay before, and when we did, we all cared about the reputation of both ourselves and the other party.

eBay was early to figure this part of the trust out: online buyers and sellers don't have another way of contextualizing the other person in a transaction, so reputation adds a confidence premium to the sale.

Realizing this early helped eBay win the auctions game and then move on to "store" models, taking a lot of online retail with it.

What eBay failed to see, however, is how this identity data could have been used elsewhere, outside the world of second-hand hand-bags, collector's items, and cheap electronics. And so, other players started chipping slowly away.

Want to know if that business person is a schmuck? I bet eBay could have told you, but LinkedIn stepped in and took over the Professional Reputation space.

Want to know how that local retail store treats its customers? I bet eBay could have told you, but Yelp stepped in and took over the Local Business Reputation space.

And that's just on the seller side!

Millions more people buy goods on eBay than sell on eBay, and buyer reputation data has much larger implications!

As I've applied for apartments and credit cards over the years, I would have LOVED to show off my eBay score, as a way to build trust between myself and a business, in order to lower my rates or get a better deal.

And remember that time I -- achem -- went on an online dating site? Why wouldn't I have told people that I was an "A++++++ Buyer" with an eBay score of over 25.


As startups like Venmo keep reminding me, trust and confidence are pilars of any economy, and The Connected Economy -- every economy powered by the Internet -- is no different.

Obviously, hindsight is 20/20; but it's just so hard for me to understand how eBay could have let their pioneering trust and reputation work go unused. We know they knew how powerful eBay scores and feedback were! Was there no imagination or dreams for something bigger?

I guess not.

Luckily, eBay's no longer a startup, so I don't have to root for them anymore. It's sad to call out a company I used to admire, but I'm glad I work in this innovation industry, so I can watch my friends and colleagues make things right.

Today, I root for the startups hustling their way into the void left by this Internet pioneer.

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