Whitman's Window Into eBay's Future

CEO Meg Whitman discusses the auction site's transformation into a "social commerce" platform and other big changes on the way

Margaret "Meg" Whitman, the longtime chief executive of eBay (EBAY), is fond of calling the auction giant the first social network. In some ways, it's true. The 12-year-old company was among the first to let users generate content. After all, most of the items for sale are supplied by members of eBay's community. They provide the photos and descriptions of items that make up eBay's auction pages. It's their content that attracts eBay's global audience of 233 million users.

That doesn't mean eBay is a pioneer in all areas. The company is just catching up to some of the Web's more recent innovations. At eBay Live!—the company's annual conference/revival for eBay buyers and sellers—Whitman & Co. announced a plan to redesign the site to make it more multimedia-centric, relying on photos and videos of products. Whitman and her managers also described efforts to make the site's auction feature available on social network pages, blogs, as well as Web sites and stores outside of eBay via widgets—those increasingly popular small programs that enable users to easily share content and incorporate it into their own Web sites.

As a result of these and other recent efforts, eBay has morphed from an online auctioneer and shopping site into what Whitman calls a "social commerce" platform. BusinessWeek reporter Catherine Holahan caught up with Whitman at eBay Live!, held this year in Boston, to discuss eBay's new identity, how eBay and the Web have changed, and what Whitman expects from the company in the future. Edited excerpts of their conversation follow.

In your keynote address you spoke about social commerce—the union of community and commerce—as what unifies eBay's businesses. How do you see the social aspect fueling e-commerce and eBay?

It goes back to our roots because we were a community anchored in commerce, and what I think is true is that when you have personal connections it is easier to do business. Think about it. When you live in New York there is a garment district, a flower district, a financial district—and why is that? Why does it make sense for those businesses to cluster together like that? There is a social network there.

First and foremost, we have to make sure that the community on eBay is as current and developed as it should be.… But we are also not averse to taking eBay off eBay, whether that is to some of the social networking sites or exporting it to your Web site with eBay To Go [a widget that enables users to embed eBay auctions into their own Web sites and blogs].

Where will most of eBay's growth come from? Will it stem from PayPal, eBay's payments business, or Skype, your Internet telephony unit? Or, will it come from eBay's core shopping business?

Our core business needs to continue to grow because eBay is still a huge chunk of this company and I think has huge growth potential. For the next few years I would anticipate that PayPal grows faster than eBay. But jobs Nos. 1, 2, and 3 are to reinvigorate the core business.

The company has made some large acquisitions in recent years; will you continue to be as acquisitive?

We have been a very acquisitive company since the beginning and I suspect we will continue to be acquisitive. There are two kinds of innovation. There is evolutionary innovation, which is making eBay better, making PayPal better. Then there is revolutionary innovation.… PayPal is a truly disruptive payment system that wouldn't have necessarily come from eBay. I think, for the most disruptive innovations, we will continue to acquire.

How does eBay's latest acquisition, StumbleUpon, fit your plans?

It is a fun company in the social discovery space.